The engineering and infrastructure company Fluor (NYSE:FLR) has found its stock pummeled in the last year, mashed down from a high of 101 to the mid-20s, and it currently trades in the $37-a-share range. After the global boom in heavy construction with the company reaping nice profits, the sudden turning down of the economic spigot last year adversely affected both the stock and the company's earning prospects for this year. Recent news, which indicates heavy construction customers are still pulling back, occurs oddly in the context, though, that 2009 can still be a decent income year for Fluor.

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Looking For Direction

Fluor, which has had one foot in two areas (the infrastructure segment and the commodity-driven arenas), is in both general construction engineering and services the oil-and-gas industry, so it is subject to the ups-and-downs of both. There can be some divergence in business prospects if the trends for both general construction and oil-and-gas diverge as well. Some of Fluor's competitors are more oriented to general construction, as in the case of Foster Wheeler AG (Nasdaq:FWLT), yet they have found themselves with earnings up, but slowing business prospects going ahead for the year.

Fluor's Mini-Surge
Recently, there was a surge in options for Fluor, a mildly bullish sign for the stock, which has at least picked itself up after getting flattened last year, and this has been attributed to a bit of a surge in the oil-and-gas trade. Yet, in this schizoid realm of decent earnings along with slowing business, the prognosis of "earnings up, business ahead down," remains in place in the industry. (Learn more about options in our complete Options Tutorial.)

Global Currents
Other currents in the global environment of large engineering firms are there to cloud the waters. KBR, Inc. (NYSE:KBR) found its business and its earnings improved with a boost from overseas, with work from such places as Iraq. While American investors try to figure out what the Obama administration's economic plans will mean for the infrastructure business, investors might want to factor in the wild card of global politics as they relate to some of these projects as well. (To learn more about the challenges of investing in global companies, see Overseas Investing No Panacea Against Downturn and Evaluating Country Risk For International Investing.)

Jacobs Engineering Group (NYSE:JEC), which just landed a new $19.7 million contract with the U.S. Air Force for its sensor technology, is an example of a company in this sector that continues to land and deliver projects - even while the economy seems to wait for direction from Washington's stimulus and spending packages.

Further cloudiness exists with stock market direction, though analyst upgrades are coming in and some reports show hedge funds scooping up distressed global infrastructure stocks. Shaw Group (NYSE:SGR), another fighter in this beaten-down sector, is also listed as attractive for scraping value off the bottom of this market, yet with Shaw's heavy mix of work in the fossil energy and nuclear trade, investors may want to pick something less volatile. (Find out the difference between a company capable of surviving a share-price beating and one that cannot in Finding Profit In Troubled Stocks.)

Is Fluor a Bargain Stock?
Fluor's earnings estimates still look good, or at least the consensus is intact for 2009 at about $3.77 a share. Still, this is down slightly from 2008's $3.89, with 2010 looking even less clear. Also, with the uncertainty on U.S. stimulus/infrastructure policy, or at least how this will play out in terms of revenue to any of the large engineering/construction firms, things are as clear as mud.

Though Fluor remains a strong long-term company, its stock price has been beaten down into the muck. This low-lying position looks like an inviting value play, but with all the uncertain trends, any negative undercurrent could drag earnings deeper in the quicksand. Proceeding with caution, at least for the next six months to a year, looks like the most solid path.

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