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Fluor (FLR) Divests AMECO South America Business, Stock Down

Fluor Corporation’s FLR shares fell 0.8% in an after-hours trading session on Mar 14, post its announcement of the divestiture of the AMECO South America business. The business, which had assets in Chile and Peru, was sold to STRACON Group — a diversified strategic partner to the mining sector in the Americas.

In conjugation with its strategic initiative to sell AMECO, this deal marks the last transaction and follows the divestiture of assets in Africa, the Caribbean, Mexico and North America.

In early 2021, the company planned to sell the Stork and AMECO businesses. The sale of the North American portion of the AMECO equipment business was completed during second-quarter 2021.

The company has been focusing on its new strategy, “Building a Better Future,” within which it has outlined four strategic priorities for driving shareholder value. First, the company intends to drive growth across portfolios by enhancing markets outside of the traditional oil and gas sector, including energy transition, advanced technology and life sciences, high-demand metals, infrastructure and mission solutions.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Second, Fluor aims to pursue contracts with fair and balanced commercial terms that reward value with a bias toward reimbursable contracts. The company has decided that it will not bid competitive fixed-price EPC in the Energy & Chemicals segment and will be more selective in Infrastructure. This marks a significant shift from the prior management team's high-risk, high-margin strategy.

Third, it intends to reinforce financial discipline by maintaining a solid balance sheet and generating predictable cash flow and earnings.

Lastly, foster a high-performance culture with purpose by advancing diversity, equity and inclusion efforts and promoting social progress and sustainability.

Stock Performance

Shares of this Zacks Rank #3 (Hold) company fell 17.8% in the past month, underperforming the Zacks Engineering - R and D Services industry’s 2.9% decline.

The company recently reported lower-than-expected results for fourth-quarter 2022. Earnings and revenues missed the Zacks Consensus Estimate by 20.4% and 10.4%, respectively.

Key Picks

Some better-ranked stocks in the Zacks Construction sector are:

Simpson Manufacturing Co., Inc. SSD: The company designs, engineers and manufactures high-quality wood and concrete building construction products designed to make structures safer and more secure that perform at high levels. It has been benefiting from product price increases and key growth initiatives.

Simpson’s earnings for 2023 are expected to decrease by 16.8%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

United Rentals, Inc. URI currently carries a Zacks Rank #2 (Buy). The long-term earnings growth rate of the company is 16.3%.

The Zacks Consensus Estimate for URI’s 2023 sales and EPS indicates growth of 20.3% and 28.3%, respectively, from the previous year’s reported levels.

Sterling Infrastructure, Inc. STRL currently carries a Zacks Rank #2. STRL has a trailing four-quarter earnings surprise of 19.3%, on average.

The Zacks Consensus Estimate for STRL’s 2023 sales indicates a 0.8% decline, while that for EPS suggests 10.8% growth.

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