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Strategies & Market Trends : Value Investing
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To: Asymmetric who wrote (55352)5/25/2015 1:08:34 PM
From: Spekulatius1 Recommendation

Recommended By
Mattyice

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I agree that CBI is cheaper on a PE basis, however, if you denominate metrics with enterprise value rather than market, cap, the valuation gap narrows considerably, because FLR has ~1B$ in net cash, while CBI carries some cash. Now take into account that FLR forward PE is 12.8 vs CBI's 10 and that they look good from a FCF perspective, while CBI is currently burning cash (receivables going up due to accrual accounting) then I think it is a close call.

FWIW, I don't own FLR either, as I think that the valuation is not yet compelling enough due to near term headwinds (slower energy related business) I would own it before CBI I think. I have typically found that when I trade quality for valuation, I typically end up paying more in end. Buying in a business with large scale construction projects is a large leap of faith and I have seen many companies getting into trouble over the years where a single large project could do a company in.
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