FLR
Fluor Corporation
Industrial/Transportation, Energy
11/19/2019
Presented
| Date | 11/14/2019 |
| Price | $17.85 |
| Market Cap | $2.50B |
| Ent Value | $4.93B |
| P/E Ratio | N/A |
| Book Value | $11.13 |
| Div Yield | 4.71% |
| Shares O/S | 140.17M |
| Ave Daily Vol | 2,577,607 |
| Short Int | N/A |
Current
| Price | $50.47 |
| Market Cap | $8.64B |
| Fluor Corp. is a holding company, which engages in providing engineering, procurement, construction, fabrication and modularization, operations, maintenance and asset integrity, as well as project management services, on a global basis. It operates through the following four segments: Energy & Chemicals, Mining, Industrial, Infrastructure & Power, Diversified Services and Government. The Energy & Chemicals segment focuses on opportunities in the upstream, midstream, downstream, chemical, petrochemical, offshore and onshore oil and gas production, liquefied natural gas and pipeline markets. The Mining, Industrial, Infrastructure & Power segment provides design, engineering, procurement, construction and project management services to the mining and metals, transportation, life sciences, advanced manufacturing and power sectors. The Diversified segment provides a wide array of asset services, asset integrity services, equipment solutions and staffing services. The Government segment provides engineering, construction, logistics, base and facilities operations and maintenance, contingency response and environmental and nuclear services to the U.S. government and governments abroad. The company was founded by John Simon Flour, Sr. in 1912 and is headquartered in Irving, TX. |
Publicly traded companies mentioned herein: Fluor Corp (FLR)
Highlights
The presenter is long shares of Fluor Inc (FLR) after the old management team mispriced a number of contracts that caused the company to lose a large amount of money and the stock to decline. Around May of 2019, the old management team was replaced by a team that has previously worked at FLR and was successful. When this new team came in they took a $700MM charge against problem projects in an attempt to “kitchen sink” the company’s issues. The business is generally run at zero net debt, but after the charges and once they run through the extra costs on their projects, there will be some net debt. The new management team wants to be even more conservative and run net cash. In order to get there, they’re looking to sell their government services business and AMECO, their equipment rental business. Management has stated publicly that they’re hoping to generate $1B in proceeds that will go toward deleveraging and putting cash on the balance sheet. Taking their Q4 guidance and run-rating that through 2020 there is very significant upside. Assuming they’re able to sell these two businesses in the middle of next year and use the cash to pay down debt, the presenter believes there is ~50% upside in the stock price to $27.50/share based on a conservative 5x EBITDA multiple. Applying a 7x multiple, where most of FLR's EPC peers trade, the stock could see ~150% upside.
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