FWC: Foster Wheeler Corp. Message Board

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Non-Tech : FWC: Foster Wheeler Corp.

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From: Dennis Roth	2/27/2008 5:20:15 AM
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Foster Wheeler Ltd. (FWLT): 4Q2007 earnings come in light but new awards very strong - Goldman Sachs - February 26, 2008 News Foster Wheeler (FWLT) reported 4Q2007 EPS of $0.56, much lower than our $0.75 estimate on the back of lower margins in its E&C business (10.5% vs our 14.0% forecast) plus about $0.10/share of one-time events including the repeal of a price tariff in Italy and a reserve for a contract dispute on a cost-plus contract. that the company hopes to get back. New awards came it at $4.6 bn, however, an encouraging sign for future earnings. Analysis We expect FWLT shares to trade off on today's earnings miss as the stock ran up into the quarter. E&C company earnings can be choppy as FWLT's results highlight. The lower-than-expected E&C margins stem from a lack of positive contract adjustments that the company had been realizing in most quarters last year. Management's comments that it expects margins to expand in 2008 coupled with the higher-than-expected backlog going into the year due to very strong new awards in 4Q2007, however, should continue to drive investor confidence in Foster Wheeler shares. We continue to believe that FWLT is one of the best positioned E&C companies in a capacity constrained industry that is enjoying long-term pricing power. Our estimates and price target our under review. Implications E&C stocks have been strong on the back of higher oil prices. FWLT's earnings miss will remind investors that results can be choppy for companies in this sector but the strong new award activity should be taken positively that the energy investment cycle is showing no signs of abating.

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