NEW YORK (TheStreet) -- Fluor Corp (FLR) was was downgraded to "market perform" from "outperform" with a lowered price target range of $70-$75 from its previous $103-$105 by analysts at Wells Fargo this morning.
The firm cited mounting risks to the engineering construction company's global infrastructure investment growth.
Wells Fargo analysts also cited the high likelihood that global commodities price super-cycle has entered the below-trend phase.
Shares of Fluor closed at $68.54 on Monday.
Separately, TheStreet Ratings team rates FLUOR CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FLUOR CORP (FLR) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FLR's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Construction & Engineering industry and the overall market, FLUOR CORP's return on equity exceeds that of both the industry average and the S&P 500.
- FLUOR CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FLUOR CORP increased its bottom line by earning $4.06 versus $2.69 in the prior year. This year, the market expects an improvement in earnings ($4.25 versus $4.06).
- FLR, with its decline in revenue, underperformed when compared the industry average of 11.3%. Since the same quarter one year prior, revenues fell by 27.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for FLUOR CORP is currently extremely low, coming in at 7.46%. Regardless of FLR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.48% trails the industry average.
- You can view the full analysis from the report here: FLR Ratings Report