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Fluor Wins $1.2B Deal for Naval Nuclear Propulsion Work


Fluor Corporation’s FLR marine propulsion business, Fluor Marine Propulsion LLC, has secured a contract from the U.S. Navy for naval nuclear propulsion work at the Naval Nuclear Laboratory. The contract is worth $1.22 billion and incorporates options, which if exercised, would bring the cumulative estimated value of this contract to $13.1 billion.

Majority of this cost-plus-fixed fee contract’s work will be carried out at Pittsburgh, PA (46%) and Schenectady, NY (45%). However, no completion date has been provided pertaining to the Naval Nuclear Propulsion Program contracts.

Streak of Deal Wins Back Government Business

The company’s Government segment, accounting for more than 27.5% of total revenues, has been performing pretty well. Fluor enjoys a solid track record of contracts, and management remains optimistic that the trend will continue even in the future, thereby driving growth of the company. Over the past few quarters, major wins in the government business have allowed Fluor to expand its long-term recurring revenue opportunities.

Revenues at the Government segment soared 73.5% year over year in the last reported quarter. The improvement in revenues was supported by the execution and substantial completion of task order awards for the U.S. Army Corps of Engineers in Puerto Rico.

Share Price Performance

Shares of Fluor, a Zacks Rank #3 (Hold) company, have outperformed the industry in the past year. Its shares have gained 8.2% in the said time frame against its industry’s decline of more than 3.1%. The outperformance was backed by a solid earnings surprise history, beating the consensus mark in three of the past four quarters, with the average being 4.45%.

Meanwhile, earnings estimates have remained stable in the past seven days for the to-be-reported quarter (second quarter of 2018) and 2018. The company’s current-year earnings are expected to grow 33.1%. Flour has a three-five year expected earnings per share growth rate of 22.9%.

Stocks to Consider

Some better-ranked stocks in the construction sector are Jacobs Engineering Group Inc. JEC, Aegion Corporation AEGN, and KBR, Inc. KBR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jacobs’s fiscal 2018 earnings are expected to grow 31.5%.

Aegion’s earnings for the current year are likely to increase 34%.

KBR has a three-five year expected earnings per share growth rate of 7.7%.

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