Fluor Corp Valuation – February 2019 $FLR

Company Profile (excerpt from Reuters): Fluor Corporation (Fluor), incorporated on September 11, 2000, is a holding company. The Company operates its business in four segments: Energy, Chemicals & Mining; Industrial, Infrastructure & Power; Government, and Maintenance, Modification & Asset Integrity (MMAI). The Company, through its subsidiaries, offers professional services providing engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services on a global basis. The Company is an integrated solutions provider for various industries, including oil and gas, chemicals and petrochemicals, mining and metals, transportation, power, life sciences and advanced manufacturing. The Company is also a service provider to the United States federal Government and governments abroad, and it performs operations and maintenance activities around the world for its industrial clients. The Company offers services in various categories, including engineering and design, procurement, construction, fabrication, maintenance, modification and asset integrity and project management. The Company offers these services both independently, as well as through its integrated solutions offerings. Its services range from basic consulting activities, at the early stages of a project, to complete design-build and maintenance contracts.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FLR – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,303,183,707 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.52 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -43.59% Fail
6. Moderate PEmg Ratio PEmg < 20 19.36 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.67 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.52 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.87 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.95
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $28.24
MG Value based on 0% Growth $16.55
Market Implied Growth Rate 5.43%
Current Price $37.70
% of Intrinsic Value N/A

Fluor Corporation (NEW) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.28 in 2014 to an estimated $1.95 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.43% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Fluor Corporation (NEW) revealed the company was trading above its Graham Number of $31.02. The company pays a dividend of $0.84 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.36, which was below the industry average of 20.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.57.

Fluor Corporation (NEW) receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$2.57
Graham Number $31.02
PEmg 19.36
Current Ratio 1.52
PB Ratio 1.67
Current Dividend $0.84
Dividend Yield 2.23%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $5,584,161,000
Total Current Liabilities $3,662,103,000
Long-Term Debt $1,667,359,000
Total Assets $9,147,976,000
Intangible Assets $553,294,000
Total Liabilities $5,948,047,000
Shares Outstanding (Diluted Average) 141,549,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.79
Dec2017 $1.36
Dec2016 $2.00
Dec2015 $2.81
Dec2014 $3.20
Dec2013 $4.06
Dec2012 $2.71
Dec2011 $3.40
Dec2010 $1.98
Dec2009 $3.75
Dec2008 $3.93
Dec2007 $2.93
Dec2006 $1.48
Dec2005 $1.31
Dec2004 $1.13
Dec2003 $0.98
Dec2002 $1.03
Dec2001 $0.13
Oct2000 $0.81
Oct1999 $0.69
Oct1998 $1.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.95
Dec2017 $2.25
Dec2016 $2.78
Dec2015 $3.19
Dec2014 $3.28
Dec2013 $3.27
Dec2012 $2.97
Dec2011 $3.13
Dec2010 $2.94
Dec2009 $3.17
Dec2008 $2.64
Dec2007 $1.85
Dec2006 $1.26
Dec2005 $1.08
Dec2004 $0.91
Dec2003 $0.78
Dec2002 $0.73

Recommended Reading:

Other ModernGraham posts about the company

Fluor Corporation Valuation – April 2018 $FLR
Fluor Corporation Valuation – December 2016 $FLR
Fluor Corporation Valuation – August 2016 $FLR
26 Best Stocks For Value Investors This Week – 2/6/16
Fluor Corp Valuation – February 2016 Update $FLR

Other ModernGraham posts about related companies

Vulcan Materials Co Valuation – February 2019 $VMC
PulteGroup Inc Valuation – January 2019 $PHM
Sherwin-Williams Co Valuation – January 2019 $SHW
Johnson Controls International PC Valuation – January 2019 $JCI
Cummins Inc Valuation – January 2019 $CMI
Flowserve Corp Valuation – January 2019 $FLS
Home Depot Inc Valuation – November 2018 $HD
Cavco Industries Inc Valuation – September 2018 $CVCO
LGI Homes Inc Valuation – September 2018 $LGIH
Stantec Inc Valuation – August 2018 $TSE-STN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Fluor Corporation Valuation – April 2018 $FLR

Company Profile (excerpt from Reuters): Fluor Corporation (Fluor), incorporated on September 11, 2000, is a holding company. The Company operates its business in four segments: Energy, Chemicals & Mining; Industrial, Infrastructure & Power; Government, and Maintenance, Modification & Asset Integrity (MMAI). The Company, through its subsidiaries, offers professional services providing engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services on a global basis. The Company is an integrated solutions provider for various industries, including oil and gas, chemicals and petrochemicals, mining and metals, transportation, power, life sciences and advanced manufacturing. The Company is also a service provider to the United States federal Government and governments abroad, and it performs operations and maintenance activities around the world for its industrial clients. The Company offers services in various categories, including engineering and design, procurement, construction, fabrication, maintenance, modification and asset integrity and project management. The Company offers these services both independently, as well as through its integrated solutions offerings. Its services range from basic consulting activities, at the early stages of a project, to complete design-build and maintenance contracts.

FLR Chart

FLR data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FLR – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,588,816,906 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.57 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -28.15% Fail
6. Moderate PEmg Ratio PEmg < 20 24.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.52 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.57 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.79 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.42
MG Growth Estimate -3.93%
MG Value $1.53
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $35.05
MG Value based on 0% Growth $20.55
Market Implied Growth Rate 8.09%
Current Price $59.64
% of Intrinsic Value 3902.24%

Fluor Corporation (NEW) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.28 in 2014 to an estimated $2.42 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.09% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Fluor Corporation (NEW) revealed the company was trading above its Graham Number of $41.47. The company pays a dividend of $0.84 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 24.67, which was below the industry average of 28.14, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.72.

Fluor Corporation (NEW) receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$2.72
Graham Number $41.47
PEmg 24.67
Current Ratio 1.57
PB Ratio 2.52
Current Dividend $0.84
Dividend Yield 1.41%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $5,601,257,000
Total Current Liabilities $3,574,170,000
Long-Term Debt $1,591,598,000
Total Assets $9,327,692,000
Intangible Assets $753,035,000
Total Liabilities $5,985,382,000
Shares Outstanding (Diluted Average) 141,031,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.20
Dec2017 $1.36
Dec2016 $2.00
Dec2015 $2.81
Dec2014 $3.20
Dec2013 $4.06
Dec2012 $2.71
Dec2011 $3.40
Dec2010 $1.98
Dec2009 $3.75
Dec2008 $3.93
Dec2007 $2.93
Dec2006 $1.48
Dec2005 $1.31
Dec2004 $1.13
Dec2003 $0.98
Dec2002 $1.03
Dec2001 $0.13
Oct2000 $0.81
Oct1999 $0.69
Oct1998 $1.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.42
Dec2017 $2.25
Dec2016 $2.78
Dec2015 $3.19
Dec2014 $3.28
Dec2013 $3.27
Dec2012 $2.97
Dec2011 $3.13
Dec2010 $2.94
Dec2009 $3.17
Dec2008 $2.64
Dec2007 $1.85
Dec2006 $1.26
Dec2005 $1.08
Dec2004 $0.91
Dec2003 $0.78
Dec2002 $0.73

Recommended Reading:

Other ModernGraham posts about the company

Fluor Corporation Valuation – December 2016 $FLR
Fluor Corporation Valuation – August 2016 $FLR
26 Best Stocks For Value Investors This Week – 2/6/16
Fluor Corp Valuation – February 2016 Update $FLR
13 Best Stocks For Value Investors This Week – 10/17/15

Other ModernGraham posts about related companies

Lennar Corp Valuation – April 2018 $LEN
Vulcan Materials Co Valuation – April 2018 $VMC
PulteGroup Inc Valuation – March 2018 $PHM
Sherwin-Williams Co Valuation – March 2018 $SHW
Cummins Inc Valuation – March 2018 $CMI
Johnson Controls International PLC Valuation – March 2018 $JCI
Flowserve Corp Valuation – February 2018 $FLS
Corning Inc Valuation – February 2018 $GLW
Home Depot Inc Valuation – February 2018 $HD
Caterpillar Inc Valuation – February 2018 $CAT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Fluor Corporation Valuation – December 2016 $FLR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Fluor Corporation (FLR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Fluor Corporation (Fluor) is a holding company. The Company is a professional services company. The Company provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services. It operates in five segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Through its Oil & Gas segment, Fluor serves the oil and gas production, processing, and chemical and petrochemical industries. The Industrial & Infrastructure segment provides design, engineering, procurement, construction, operations and maintenance, and project management services. The Government segment is a provider of engineering, construction, logistics, and environmental and nuclear services, among others. The Global Services segment provides a range of solutions to support projects across Fluor groups. In the Power segment, it provides a range of services to the gas-fueled and solid-fueled markets, among others.

FLR Chart

FLR data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of FLR – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,150,326,376 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.48 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -22.62% Fail
6. Moderate PEmg Ratio PEmg < 20 20.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.59 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.48 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.83 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $2.84
MG Growth Estimate -0.62%
MG Value $20.63
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $41.25
MG Value based on 0% Growth $24.18
Market Implied Growth Rate 5.79%
Current Price $57.14
% of Intrinsic Value 276.93%

Fluor Corporation (NEW) does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the low current ratio, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.97 in 2012 to an estimated $2.84 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.79% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Fluor Corporation (NEW) revealed the company was trading above its Graham Number of $33.23. The company pays a dividend of $0.84 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 20.09, which was below the industry average of 28.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.33.

Fluor Corporation (NEW) scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.33
Graham Number $33.23
PEmg 20.09
Current Ratio 1.48
PB Ratio 2.59
Current Dividend $0.84
Dividend Yield 1.47%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $5,741,578,000
Total Current Liabilities $3,876,197,000
Long-Term Debt $1,555,522,000
Total Assets $9,316,606,000
Intangible Assets $593,161,000
Total Liabilities $6,210,321,000
Shares Outstanding (Diluted Average) 140,924,000

Earnings Per Share History

Next Fiscal Year Estimate $2.20
Dec2015 $2.81
Dec2014 $3.20
Dec2013 $4.06
Dec2012 $2.71
Dec2011 $3.40
Dec2010 $1.98
Dec2009 $3.75
Dec2008 $3.93
Dec2007 $2.93
Dec2006 $1.48
Dec2005 $1.31
Dec2004 $1.13
Dec2003 $0.98
Dec2002 $1.03
Dec2001 $0.13
Oct2000 $0.81
Oct1999 $0.69
Oct1998 $1.49
Oct1997 $0.88
Oct1996 $1.61

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.84
Dec2015 $3.19
Dec2014 $3.28
Dec2013 $3.27
Dec2012 $2.97
Dec2011 $3.13
Dec2010 $2.94
Dec2009 $3.17
Dec2008 $2.64
Dec2007 $1.85
Dec2006 $1.26
Dec2005 $1.08
Dec2004 $0.91
Dec2003 $0.78
Dec2002 $0.73
Dec2001 $0.65
Oct2000 $0.97

Recommended Reading:

Other ModernGraham posts about the company

26 Best Stocks For Value Investors This Week – 2/6/16
Fluor Corp Valuation – February 2016 Update $FLR
13 Best Stocks For Value Investors This Week – 10/17/15
Fluor Corporation Valuation – October 2015 Update $FLR
The Best Companies of the Construction Industry – October 2015

Other ModernGraham posts about related companies

Quanta Services Inc Valuation – August 2016 $PWR
Jacobs Engineering Group Inc Valuation – August 2016 $JEC
PPG Industries Inc Valuation – August 2016 $PPG
D.R. Horton Inc Valuation – August 2016 $DHI
Martin Marietta Materials Inc Valuation – August 2016 $MLM
Fluor Corporation Valuation – August 2016 $FLR
Vulcan Materials Co Valuation – July 2016 $VMC
PulteGroup Inc Valuation – July 2016 $PHM
Sherwin-Williams Co Valuation – July 2016 $SHW
Cummins Inc Valuation – July 2016 $CMI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Fluor Corporation Valuation – August 2016 $FLR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Fluor Corporation (FLR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Fluor Corporation (Fluor) is a holding company. The Company is a professional services company. The Company provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services. It operates in five segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Through its Oil & Gas segment, Fluor serves the oil and gas production, processing, and chemical and petrochemical industries. The Industrial & Infrastructure segment provides design, engineering, procurement, construction, operations and maintenance, and project management services. The Government segment is a provider of engineering, construction, logistics, and environmental and nuclear services, among others. The Global Services segment provides a range of solutions to support projects across Fluor groups. In the Power segment, it provides a range of services to the gas-fueled and solid-fueled markets, among others.

[level-free]
FLR Chart

FLR data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of FLR – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,238,450,142 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.51 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -13.25% Fail
6. Moderate PEmg Ratio PEmg < 20 16.36 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.37 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.51 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.87 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FLR value chart August 2016

EPSmg $3.17
MG Growth Estimate 1.04%
MG Value $33.62
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $46.03
MG Value based on 0% Growth $26.98
Market Implied Growth Rate 3.93%
Current Price $51.94
% of Intrinsic Value 154.51%

Fluor Corporation (NEW) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.97 in 2012 to an estimated $3.17 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.93% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Fluor Corporation (NEW) revealed the company was trading above its Graham Number of $39.9. The company pays a dividend of $0.84 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 16.36, which was below the industry average of 28.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.62.

Fluor Corporation (NEW) receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

FLR charts August 2016

Net Current Asset Value (NCAV) -$3.62
Graham Number $39.90
PEmg 16.36
Current Ratio 1.51
PB Ratio 2.37
Current Dividend $0.84
Dividend Yield 1.62%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $5,402,869,000
Total Current Liabilities $3,589,930,000
Long-Term Debt $1,572,001,000
Total Assets $9,001,727,000
Intangible Assets $0
Total Liabilities $5,913,116,000
Shares Outstanding (Diluted Average) 140,865,000

Earnings Per Share History

Next Fiscal Year Estimate $3.19
Dec2015 $2.81
Dec2014 $3.20
Dec2013 $4.06
Dec2012 $2.71
Dec2011 $3.40
Dec2010 $1.98
Dec2009 $3.75
Dec2008 $3.93
Dec2007 $2.93
Dec2006 $1.48
Dec2005 $1.31
Dec2004 $1.13
Dec2003 $0.98
Dec2002 $1.03
Dec2001 $0.13
Oct2000 $0.81
Oct1999 $0.69
Oct1998 $1.49
Oct1997 $0.88
Oct1996 $1.61

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.17
Dec2015 $3.19
Dec2014 $3.28
Dec2013 $3.27
Dec2012 $2.97
Dec2011 $3.13
Dec2010 $2.93
Dec2009 $3.17
Dec2008 $2.63
Dec2007 $1.85
Dec2006 $1.26
Dec2005 $1.08
Dec2004 $0.91
Dec2003 $0.78
Dec2002 $0.73
Dec2001 $0.65
Oct2000 $0.97

Recommended Reading:

Other ModernGraham posts about the company

26 Best Stocks For Value Investors This Week – 2/6/16
Fluor Corp Valuation – February 2016 Update $FLR
Fluor Corp Valuation – February 2016 Update $FLR
13 Best Stocks For Value Investors This Week – 10/17/15
13 Best Stocks For Value Investors This Week – 10/17/15

Other ModernGraham posts about related companies

Vulcan Materials Co Valuation – July 2016 $VMC
PulteGroup Inc Valuation – July 2016 $PHM
Sherwin-Williams Co Valuation – July 2016 $SHW
Cummins Inc Valuation – July 2016 $CMI
Corning Inc Valuation – May 2016 $GLW
Flowserve Corporation Valuation – May 2016 $FLS
Lennar Corporation Valuation – May 2016 $LEN
Quanta Services Inc Valuation – February 2016 $PWR
Martin Marietta Materials Inc Valuation – February 2016 Update $MLM
Fluor Corp Valuation – February 2016 Update $FLR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Fluor Corp Valuation – February 2016 Update $FLR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Fluor Corp (FLR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Fluor Corporation (Fluor) is a holding company. The Company is a professional services company. The Company provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services. It operates in five segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Through its Oil & Gas segment, Fluor serves the oil and gas production, processing, and chemical and petrochemical industries. The Industrial & Infrastructure segment provides design, engineering, procurement, construction, operations and maintenance, and project management services. The Government segment is a provider of engineering, construction, logistics, and environmental and nuclear services, among others. The Global Services segment provides a range of solutions to support projects across Fluor groups. In the Power segment, it provides a range of services to the gas-fueled and solid-fueled markets, among others.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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ModernGraham Valuation of FLR – February 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,241,833,299 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.83 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 34.61% Pass
6. Moderate PEmg Ratio PEmg < 20 12.03 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.05 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.83 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.42 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FLR value Chart February 2016

EPSmg $3.57
MG Growth Estimate 2.12%
MG Value $45.53
Opinion Fairly Valued
MG Value based on 3% Growth $51.81
MG Value based on 0% Growth $30.37
Market Implied Growth Rate 1.77%
Current Price $42.99
% of Intrinsic Value 94.42%

Fluor Corp qualifies for both the Enterprising Investor and the more conservative Defensive Investor.  The Defensive Investor is only concerned by the low current ratio, and the Enterprising Investor has no initial concerns.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $3.13 in 2011 to an estimated $3.57 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 1.77% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

Stage 3: Information for Further Research

FLR Charts February 2016

Net Current Asset Value (NCAV) $4.74
Graham Number $43.80
PEmg 12.03
Current Ratio 1.83
PB Ratio 2.05
Dividend Yield 1.95%
Number of Consecutive Years of Dividend Growth 2

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Total Current Assets $5,229,758,000
Total Current Liabilities $2,861,801,000
Long-Term Debt $992,689,000
Total Assets $7,599,361,000
Intangible Assets $0
Total Liabilities $4,537,021,000
Shares Outstanding (Diluted Average) 146,085,000

Earnings Per Share History

Next Fiscal Year Estimate $3.96
Dec2014 $3.20
Dec2013 $4.06
Dec2012 $2.71
Dec2011 $3.40
Dec2010 $1.98
Dec2009 $3.75
Dec2008 $3.93
Dec2007 $2.93
Dec2006 $1.48
Dec2005 $1.31
Dec2004 $1.13
Dec2003 $0.98
Dec2002 $1.03
Dec2001 $0.13
Oct2000 $0.81
Oct1999 $0.69
Oct1998 $1.49
Oct1997 $0.88
Oct1996 $1.61

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.57
Dec2014 $3.28
Dec2013 $3.27
Dec2012 $2.97
Dec2011 $3.13
Dec2010 $2.94
Dec2009 $3.17
Dec2008 $2.64
Dec2007 $1.85
Dec2006 $1.26
Dec2005 $1.08
Dec2004 $0.91
Dec2003 $0.78
Dec2002 $0.73
Dec2001 $0.65
Oct2000 $0.97
Oct1999 $1.01

Recommended Reading:

Other ModernGraham posts about the company

13 Best Stocks For Value Investors This Week – 10/17/15
13 Best Stocks For Value Investors This Week – 10/17/15
Fluor Corporation Valuation – October 2015 Update $FLR
The Best Companies of the Construction Industry – October 2015
The 20 Best Stocks For Value Investors This Week – 7/25/15

Other ModernGraham posts about related companies

Jacobs Engineering Group Inc Valuation – January 2016 Update $JEC
Lowe’s Companies Inc Valuation – January 2016 Update $LOW
PulteGroup Inc Valuation – January 2016 Update $PHM
Flowserve Corp Valuation – November 2015 Update $FLS
Lennar Corporation Valuation – November 2015 Update $LEN
Home Depot Inc. Valuation – November 2015 Update $HD
Quanta Services Inc. Valuation – October 2015 Update $PWR
Fluor Corporation Valuation – October 2015 Update $FLR
Martin Marietta Materials Inc. Valuation – October 2015 Update $MLM
Jacobs Engineering Group Analysis – October 2015 Update $JEC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Fluor Corporation Valuation – October 2015 Update $FLR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Fluor Corporation (FLR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Fluor Corporation (Fluor) is a holding company. The Company is a professional services company. The Company provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services. It operates in five segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Through its Oil & Gas segment, Fluor serves the oil and gas production, processing, and chemical and petrochemical industries. The Industrial & Infrastructure segment provides design, engineering, procurement, construction, operations and maintenance, and project management services. The Government segment is a provider of engineering, construction, logistics, and environmental and nuclear services, among others. The Global Services segment provides a range of solutions to support projects across Fluor groups. In the Power segment, it provides a range of services to the gas-fueled and solid-fueled markets, among others.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of FLR – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,506,347,677 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.90 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 34.61% Pass
6. Moderate PEmg Ratio PEmg < 20 12.56 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.13 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.40 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FLR value Chart October 2015

EPSmg $3.57
MG Growth Estimate 2.12%
MG Value $45.53
Opinion Fairly Valued
MG Value based on 3% Growth $51.81
MG Value based on 0% Growth $30.37
Market Implied Growth Rate 2.03%
Current Price $44.87
% of Intrinsic Value 98.55%

Fluor Corporation qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the low current ratio.  The Enterprising Investor has no initial concerns.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $3.13 in 2011 to an estimated $3.57 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 2.03% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Fluor Corporation (FLR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

FLR Charts October 2015

Net Current Asset Value (NCAV) $5.13
Graham Number $43.71
PEmg 12.56
Current Ratio 1.90
PB Ratio 2.13
Dividend Yield 1.87%
Number of Consecutive Years of Dividend Growth 2

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $5,202,717,000
Total Current Liabilities $2,742,549,000
Long-Term Debt $992,460,000
Total Assets $7,560,373,000
Intangible Assets $0
Total Liabilities $4,443,768,000
Shares Outstanding (Diluted Average) 147,921,000

Earnings Per Share History

Next Fiscal Year Estimate $3.96
Dec14 $3.20
Dec13 $4.06
Dec12 $2.71
Dec11 $3.40
Dec10 $1.98
Dec09 $3.75
Dec08 $3.93
Dec07 $2.93
Dec06 $1.48
Dec05 $1.31
Dec04 $1.13
Dec03 $0.98
Dec02 $1.03
Dec01 $0.13
Oct00 $0.81
Oct99 $0.69
Oct98 $1.49
Oct97 $0.88
Oct96 $1.61

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.57
Dec14 $3.28
Dec13 $3.27
Dec12 $2.97
Dec11 $3.13
Dec10 $2.94
Dec09 $3.17
Dec08 $2.64
Dec07 $1.85
Dec06 $1.26
Dec05 $1.08
Dec04 $0.91
Dec03 $0.78
Dec02 $0.73
Dec01 $0.65
Oct00 $0.97
Oct99 $1.01

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Construction Industry – October 2015
The 20 Best Stocks For Value Investors This Week – 7/25/15
Fluor Corporation Analysis – July 2015 Update $FLR
21 Companies in the Spotlight This Week – 5/9/15
Fluor Corporation Quarterly Valuation – May 2015

Other ModernGraham posts about related companies

Jacobs Engineering Group Analysis – October 2015 Update $JEC
D.R. Horton Inc. Analysis – October 2015 Update $DHI
The Best Companies of the Construction Industry – October 2015
Mohawk Industries Inc. Analysis – October 2015 Update $MHK
PulteGroup Inc. Analysis – October 2015 Update $PHM
Masco Corporation Analysis – September 2015 Update $MAS
Flowserve Corporation Analysis – August 2015 Update $FLS
Alexander & Baldwin Inc Analysis – Initial Coverage $ALEX
Lennar Corporation Analysis – August 2015 Update $LEN
Aecom Analysis – Initial Coverage $ACM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Fluor Corporation Analysis – July 2015 Update $FLR

220px-Logo_FLUOR.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Fluor Corporation (FLR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Fluor Corporation (Fluor) is a holding company. The Company is a professional services company. The Company provides engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services. It operates in five segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Through its Oil & Gas segment, Fluor serves the oil and gas production, processing, and chemical and petrochemical industries. The Industrial & Infrastructure segment provides design, engineering, procurement, construction, operations and maintenance, and project management services. The Government segment is a provider of engineering, construction, logistics, and environmental and nuclear services, among others. The Global Services segment provides a range of solutions to support projects across Fluor groups. In the Power segment, it provides a range of services to the gas-fueled and solid-fueled markets, among others.

[level-free]
To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.
[/level-free]
[level-mg-stocks-screens-subscriber]

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $48.80
MG Value $47.59
MG Opinion Fairly Valued
Value Based on 3% Growth $52.44
Value Based on 0% Growth $30.74
Market Implied Growth Rate 2.50%
Net Current Asset Value (NCAV) $5.53
PEmg 13.49
Current Ratio 1.91
PB Ratio 2.38

Balance Sheet – March 2015

Current Assets $5,379,000,000
Current Liabilities $2,820,000,000
Total Debt $992,000,000
Total Assets $7,619,000,000
Intangible Assets $0
Total Liabilities $4,550,000,000
Outstanding Shares 149,900,000

Earnings Per Share

2015 (estimate) $4.09
2014 $3.20
2013 $4.06
2012 $2.71
2011 $3.40
2010 $1.98
2009 $3.75
2008 $3.93
2007 $2.93
2006 $1.48
2005 $1.31

Earnings Per Share – ModernGraham

2015 (estimate) $3.62
2014 $3.28
2013 $3.27
2012 $2.97
2011 $3.13
2010 $2.94

Dividend History

Free Cash Flow

Conclusion:

Fluor Corporation qualifies for the Enterprising Investor and the more conservative Defensive Investor.  The Defensive Investor is only concerned with the low current ratio.  The Enterprising Investor has no initial concerns.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the evaluation.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $3.13 in 2011 to an estimated $3.62 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 2.5% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Fluor Corporation (FLR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

Fluor Corporation Quarterly Valuation – February 2015 $FLR

220px-Logo_FLUOR.svg

Fluor Corporation should attract both the Enterprising Investor and the more conservative Defensive Investor. The Defensive Investor is only concerned with the low current ratio, while the Enterprising Investor has no initial concerns. Therefore, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.94 in 2010 to an estimated $3.58 for 2014. This is a very strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 3.51% over the next 7-10 years. The ModernGraham valuation model, therefore, returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of Fluor Corporation (FLR) for greater perspective!

Read the full valuation on Seeking Alpha!

FLR Chart

FLR data by YCharts

Disclaimer:  The author did not hold a position in Fluor Corporation (FLR) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Fluor Corporation Quarterly Valuation – October 2014 $FLR

220px-Logo_FLUOR.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies to Research for the Defensive Investor – October 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Fluor Corporation (FLR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Fluor Corporation (Fluor) is a holding company. It is a professional services company providing engineering, procurement, construction and maintenance, as well as project management services on a global basis. Fluor serves a diverse set of industries worldwide, including oil and gas, chemicals and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the United Services federal government. Fluor operates in five principal segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Fluor Constructors International, Inc., which is organized and operates separately from the rest of its business, provides management and construction services in the United States and Canada, both independently and as a subcontractor on projects in each of its segments. In November 2011, it acquired a sulfur technology company, Goar, Allison & Associates, a unit of Air Products.
Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $64.84
MG Value $50.62
MG Opinion Overvalued
Value Based on 3% Growth $50.94
Value Based on 0% Growth $29.86
Market Implied Growth Rate 4.98%
Net Current Asset Value (NCAV) $7.81
PEmg 18.46
Current Ratio 1.68
PB Ratio 2.85

Balance Sheet – June 2014

Current Assets $6,005,000,000
Current Liabilities $3,571,000,000
Total Debt $497,000,000
Total Assets $8,399,000,000
Intangible Assets $0
Total Liabilities $4,752,000,000
Outstanding Shares 160,500,000

Earnings Per Share

2014 (estimate) $3.91
2013 $4.06
2012 $2.71
2011 $3.40
2010 $1.98
2009 $3.75
2008 $3.93
2007 $2.93
2006 $1.48
2005 $1.31
2004 $1.13

Earnings Per Share – ModernGraham

2014 (estimate) $3.51
2013 $3.27
2012 $2.97
2011 $3.13
2010 $2.94
2009 $3.17

Dividend History

Conclusion:

Fluor Corporation qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned with the low current ratio and the high PB ratio, while the Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.94 in 2010 to an estimated $3.51 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 4.98% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Fluor Corporation (FLR) for a better perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Fluor Corporation (FLR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Fluor Corporation (FLR) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Fluor Corporation Quarterly Valuation – July 2014 $FLR

220px-Logo_FLUOR.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies to Research for the Enterprising Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Fluor Corporation (FLR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Fluor Corporation (Fluor) is a holding company. It is a professional services company providing engineering, procurement, construction and maintenance, as well as project management services on a global basis. Fluor serves a diverse set of industries worldwide, including oil and gas, chemicals and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the United Services federal government. Fluor operates in five principal segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Fluor Constructors International, Inc., which is organized and operates separately from the rest of its business, provides management and construction services in the United States and Canada, both independently and as a subcontractor on projects in each of its segments. In November 2011, it acquired a sulfur technology company, Goar, Allison & Associates, a unit of Air Products.
FLR Chart

FLR data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $76.02
MG Value $50.66
MG Opinion Overvalued
Value Based on 3% Growth $51.09
Value Based on 0% Growth $29.95
Market Implied Growth Rate 6.54%
Net Current Asset Value (NCAV) $8.25
PEmg 21.58
Current Ratio 1.79
PB Ratio 3.28

Balance Sheet – 3/31/2014

Current Assets $5,614,800,000
Current Liabilities $3,144,800,000
Total Debt $496,700,000
Total Assets $7,991,900,000
Intangible Assets $0
Total Liabilities $4,301,200,000
Outstanding Shares 159,300,000

Earnings Per Share

2014 (estimate) $3.94
2013 $4.06
2012 $2.71
2011 $3.40
2010 $1.98
2009 $3.79
2008 $3.93
2007 $2.93
2006 $1.48
2005 $1.31
2004 $1.13

Earnings Per Share – ModernGraham

2014 (estimate) $3.52
2013 $3.27
2012 $2.97
2011 $3.14
2010 $2.95
2009 $3.18

Dividend History

FLR Dividend Chart

FLR Dividend data by YCharts

Conclusion:

Fluor qualifies for the Enterprising Investor but not the Defensive Investor, who has concerns with the low current ratio and the high PEmg and PB ratios at this time.  The company passes all of the Enterprising Investor’s requirements, though.  As a result, Enterprising Investors  following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities including a review of ModernGraham’s valuation of Jacobs Engineering Group (JEC).  As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.95 in 2010 to only an estimated $3.52 for 2014. This level of demonstrated growth does not support the market’s implied estimate of 6.54% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Fluor Corporation (FLR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Fluor Corporation (FLR) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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