FMC Technologies Poised For Growth Amid Oil Price Woes
Zacks Investment Research | Nov 30, 2016 09:23PM ET
We issued an updated research report on Oil drilling equipment maker FMC Technologies Inc. (NYSE:FTI) on Nov 30, 2016.
FMC Technologies has a diversified product portfolio, specialty service capabilities and proprietary technological expertise. The company’s dominance in the market, technology leadership and efficient execution skills are its key strengths. However, the unprecedented oil slide has rocked equipment suppliers like FMC Technologies, which grapple with fewer future orders from explorers that are looking to cut capital expenditure.
As a result, FMC Technologies currently has a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
FMC Technologies is particularly well positioned in the subsea systems market. It is the company’s largest and fastest-growing business and accounts for about two-thirds of the revenues. In spite of pricing pressure and reduced activity, FMC Technologies has been able to maintain attractive operating margins, courtesy of relentless cost reductions and excellent project execution. This supported the company’s recent earnings beat – the first in four quarters.
The company’s strong backlog – now $3 billion – reflects not only steady demand from customers but also long-term earnings and cash flow visibility. This enables the company to navigate uncertainty better than many of its peers.
Additionally, following the Gulf of Mexico oil spill, the company continues to benefit from the requirements for better offshore safety equipments. Stricter regulations on drilling have translated into enhanced opportunities for subsea equipment suppliers like FMC Technologies.
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