Foster Wheeler (FWLT) is an international engineering, construction and project management contractor as well as a power equipment supplier. The Company operates through two business groups, The Global Engineering and Construction (E&C) Group and The Global Power Group.
Foster Wheeler is one stock that hasn't escaped the brutal selloff. This is a company with a huge backlog of work that exceeds the market cap of the company which, according to the CEO, is not in danger of being cancelled unless oil goes under $70, and even then isn't a sure thing to be cancelled.
They have a forward P.E under 8 and are expected to grow earnings at 18% for the next five years. This gives them a PEG of .48. Analysts have them earning $4.24 next year, which if they were to miss by $1 would still give them a P.E of 10 and a PEG under 1.0. And let's not forget the buyback that was just announced of 15% of the shares that will help offset any weakness in earnings.
The is scheduled to release third-quarter results on November 5.
The company reported its second quarter in early August, referring to it as the second consecutive quarter of record earnings.
Earnings per share of 98 cents, excluding an item, surpassed the consensus estimate by 21% and improved on the previous year's total. The company missed expectations only once over the past 5 consecutive quarters but still averaged out an upside surprise of 6%.
Analysts are calling for full-year earnings per share of $3.75, up 3% from the estimates of two months ago.
At 70%, FWLT boasts the highest return on equity (ROE) of the group and stomps the industry average of 9%. Earnings per share are expected to grow by 18% over the next 3 ? 5 years, which compares favorably to the industry average of 15%. Historically, FWLT's earnings ascended 20% over the past 5 years.
Foster Wheeler is trading 6x. The company's 5-year low P/E is the lowest of the bunch at 0.74.
While there were more downside to come as more funds faced redemptions and oil continues to fall, this is a great time to go against the crowd and start a position in FWLT, taking advantage of any further weakness to average down. This isn't for the faint of heart, but those willing to take a gamble could be rewarded in the future.
Foster Wheeler Ltd. has announced on October 30 that its Milan-based subsidiary Foster Wheeler Italiana S.p.A., part of its Global Engineering and Construction Group, has been awarded a contract by Zwara Oil Refinery Company Limited (ZORCO) for consultancy and project management services for a planned new 200,000 barrels per stream day crude oil refinery at Mellita, near Zwara, in the Great Socialist People’s Libyan Arab Jamahiriya. ZORCO is a project company in which Tamoil Africa Holdings Ltd. holds the equity.
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- SeekingAlpha: Feeling Brave? Try Foster Wheeler, October 02, 2008
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