Fluor tumbles 24% on news of SEC accounting probe

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Securities and Exchange Commission

One of the biggest declines on Tuesday came from an engineering and construction company. The $2 billion market cap Fluor (NYSE:FLR) fell substantially after it reported its preliminary Q4 financial results.

The data itself was of secondary significance, however, as the company also mentioned in its report that the Securities and Exchange Commission (SEC) would be looking into the company’s past accounting practices, something which is justifiably seen as a worrying sign for the company.

The company announced on Tuesday that the SEC had opened a new investigation, requesting past financial documents as well as info on certain projects the company had been working on in Q2 2019. Fluor added that it would be performing its own internal reviews but hasn’t come to any hard stance on whether or not there were any accounting errors as of yet.

“Fluor announced that the Securities and Exchange Commission (“SEC”) is conducting an investigation of the Company’s past accounting and financial reporting, and has requested documents and information related to projects for which the Company recorded charges in the second quarter of 2019,” read an official press release from the company. “In the course of responding to the SEC’s data requests and conducting our own internal review, the Company is reviewing its prior period reporting and related control environment. The Company has not made a determination at this time as to whether there are prior period material errors in its financial statements, although such remains possible.”

As for the financial results themselves, Fluor announced a strong cash balance of $2 billion as of the end of 2019, while $12.6 billion in new awards as well as an expected project backlog of $32.7 billion. Additional financial figures will be revealed when the full quarterly results are released, but the company did provide an adjusted earnings per share (EPS) target of around $1.5 per share.

Shares of the company fell by 24.3% in response to the news, hitting a new 12-month low. While a bad piece of news, shares of the engineering and construction company have been steadily tumbling for a while now, having lost almost two-thirds of its market cap over the past year. Most analysts covering the stock are now neutral on the company, with six of the ten Wall Street experts giving a “neutral” rating for the company. However, despite the company’s losses over the past 12 months, no analysts have a “sell” rating, with the remaining four all having an optimistic” buy” rating for the stock. Time will tell how the company performs, but this SEC probe is the last thing the Fluor needs at the moment.

 

Fluor Company Profile

Fluor is one of the largest global providers of engineering, procurement, construction, fabrication, operations, and maintenance services. The firm serves a wide range of end markets including oil and gas, chemicals, mining, metals, and transportation. The company’s business is organized into four segments: energy and chemicals; mining, industrial, infrastructure, and power; government; and diversified services. Fluor employs over 53,000 workers in more than 100 countries. The company generated $19 billion in revenue and $522 million in adjusted operating income in 2018. – Warrior Trading News

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