Fluor Is On a Roll, But Wait For a Pullback To Enter

| About: Fluor Corporation (FLR)
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Fluor Corporation (NYSE:FLR), through its subsidiaries, provides engineering, procurement, and construction and maintenance [EPCM] services worldwide. It has five segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services, and Power.

Fluor Corp. has everything going for it at the moment. It is winning contracts left and right, and the stock has gone through the roof. Over the past 90 days, this year's earnings estimates have increased 26 cents to $4.23 per share. The company has posted a 22% average surprise over the past three quarters. Technically, the chart has gone straight up, so it may be best to wait for a pullback to enter.

The Power segment provides EPCM, program management, start-up, and commissioning services to the gas, solid fuel, nuclear, and plant betterment markets. The company also operates independently and as a subcontractor, providing unionized management and construction services in the United States and Canada.

The company said its joint venture, ICA Fluor, has won two contracts worth $20 million to build two lightweight offshore drilling platforms in the Gulf Of Mexico. The contracts were awarded by Pemex Exploration and Production to a subsidiary of ICA Fluor, a joint venture between Irving-based Fluor and Empresas ICA, a Mexico-based construction and engineering company.

In early-August, the company said its second-quarter profit jumped 44%, helped by growth in every one of its business segments except its government segment. FLR reported net income of $96 million, or $1.05 per share, compared with net income of $67 million, or 74 cents per share, in last year's second quarter. Revenue rose to $4.2 billion from $3.5 billion a year ago. Analysts expected 94 cents per share.

After that, the company raised its full-year outlook. based on higher-than-expected second-quarter results. The company now expects to report a profit of $4 per share to $4.20 per share, compared with a previous guidance of $3.50 to $3.80 per share. Analysts predicted a profit of $3.98 per share for 2007.

"Fluor continues to capitalize on the market for major new energy and infrastructure capital programs globally, as evidenced by the robustness of our new awards and backlog," said Chairman and Chief Executive Officer Alan Boeckmann. "Strong operating performance and substantial market opportunity continues to reinforce our confidence in the business outlook."

The chart looks beautiful, but at the same time is a bit worrisome due to the fact that it has been straight up for a long time. Obviously, the fundamentals are superb, which is the reason for the parabolic runup, but new investors might be advised to wait for a pullback before entering. The $150 level seems like a decent entry point.