The index and the portfolio share similar algorithms and stock selections from multifactor models. The portfolio is more concentrated and is truly actively managed. The index is rebalanced quarterly and is 100% rules-based in its constituent selection.
The stock that we are highlighting and is doing double duty is the Dutch based Chicago Bridge & Iron. The stock is weighted based on its scorecard or ranking by our multi-factor model in the portfolio. In the Index and ETF it began the quarter equally weighted. CBI is an engineering, procurement, and construction company with global operations.
CBI offers conceptual design, engineering, procurement, fabrication, field erection, mechanical installation, and commissioning services. The company's projects include hydrocarbon processing plants, liquefied natural gas terminals and peak shaving plants, offshore structures, pipelines, bulk liquid terminals, water storage and treatment facilities, and other steel structures and associated systems. It serves various industries, including oil and gas, petrochemical and chemical, power, water and wastewater, and metals and mining. CBI was founded in 1889 and is based in Hoofddorp, the Netherlands with over 12,000 employees.
Its business strategy appears to have been implemented efficiently as evidenced by its financial results and growth. CBI's current market capitalization is over $3.7 billion, and annual revenue is at $3.34 billion.
CBI has displayed some impressive growth data in the most recent quarter and had a quarterly revenue increase of 32.60% and a 37.55% revenue increase over the past year. The quarterly earnings growth was an overwhelming 174.40%. This sharp increase in earnings is attributed to the energy market's strong demand. This has resulted in net income figures rising from $13.3 million to 36.6 million over the last year.
Over the past twelve months, CBI has a 7.22% return on assets [ROA] and a robust return on equity [ROE] of 27.21%. This places it among the top 10% in the Construction and Engineering Industry. Its operating margin of 5.22% for the year is above the industry's operating margin of 4.38% indicating incremental, but yet material efficiency in comparison to its peers.
Based on the analysis of our multifactor model, and looking at the three and six month charts, the valuation of the stock remains at a reasonable level among its peer group and other mid cap growth companies, in spite of its recent run. Its price to earnings to growth [PEG] ratio of only .023 over the past year serves as a statistically strong indicator.
Disclosure: Mr. Corn is CEO of Clear Indexes LLC and Clear Asset Management LLC. Chicago Bridge & Iron [CBI] is a constituent in the Clear Mid Cap Growth Index licensed for the ETF:MCG. It is also a holding in the Clear Mid Cap Growth portfolio.
Mr. Corn owns shares of the ETF:MCG and shares of CBI directly through his participation in the portfolio.
CBI 1-yr chart