The energy infrastructure company announced yesterday that Westinghouse Electric Company is purchasing its outstanding equity interests in its nuclear construction business.
"For CB&I shareholders, [the Westinghouse deal] provides clarity and increased predictability from our growing backlog of work in markets that are more strategic to our future growth," CEO Philip Asherman said in a statement.
Chicago Bridge & Iron will take a $1 to $1.2 billion after tax charge tied to the loss of certain nuclear projects, Credit Suisse said in a note.
"While the charge is large, we see this as a positive catalyst as the charge is now known, over, and non-cash. More important, Westinghouse will assume all previous, current, and future liabilities associated with the nuc. projects," Credit Suisse added. The company is now "significantly de-risked," the firm said.
Shares of Chicago Bridge & Iron were up by 13.94% to $44.39 on heavy trading volume on Wednesday morning. So far today, 4.48 million shares of the company have traded versus its 30-day average of 1.81 million shares.
Separately, TheStreet Ratings team rates CHICAGO BRIDGE & IRON CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate CHICAGO BRIDGE & IRON CO (CBI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CHICAGO BRIDGE & IRON CO has improved earnings per share by 18.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CHICAGO BRIDGE & IRON CO increased its bottom line by earning $4.98 versus $4.18 in the prior year. This year, the market expects an improvement in earnings ($5.85 versus $4.98).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Construction & Engineering industry average. The net income increased by 19.0% when compared to the same quarter one year prior, going from $142.40 million to $169.52 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.1%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- CBI has underperformed the S&P 500 Index, declining 16.75% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- CBI's debt-to-equity ratio of 0.73 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CBI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.66 is low and demonstrates weak liquidity.
- You can view the full analysis from the report here: CBI