Are the good times here for good at Chicago Bridge & Iron Company N.V. (NYSE:CBI)? The company’s earnings beat and swing to a profit announced last week may be too little, and too late, in the context of the stock’s technical overhang.
On Friday, Chicago Bridge & Iron Company N.V. (NYSE:CBI) surged 15.57% to close at $31.92 after 4.83 million shares changed hands.
CB&I (CBI) is an industrial contractor and provider of technology and infrastructure for the energy industry.
Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s Earnings Beat
The company reported third quarter EPS of $1.28 which beat by $0.13 and revenue of $2.80 billion which was down 15.7% but still beat estimates by $50 million.
“Our results for the third quarter were strong, despite the headwinds of the market and movement on the timing of several new awards,” said Philip K. Asherman, CB&I’s President and Chief Executive Officer in a statement. “New awards, revenues, operating income and margins, and earnings per share all reached their highest points year-to-date. We continue to be optimistic with a very active prospect list that we expect to see awarded in the fourth quarter and into 2017.”
The results come amidst an improvement in oil prices, though the jury is out on whether the rise is sustainable.
“This has been an extremely challenging year for those companies concentrated in energy, particularly oil and gas, as the volatility in commodity pricing continues,” Asherman said on the conference call. “The collateral impact from this instability, in addition to other global economic concerns and macro factors, has delayed the final investment decisions of many new projects we anticipated this year.”
Chicago Bridge & Iron Company N.V. (NYSE:CBI) nuclear deal in litigation
The company’s deal to dispose of its nuclear construction business to Westinghouse is now held up in courts owing to a dispute over working capital of approximately $2.4 billion. According to the company, Westinghouse is attempting to abdicate its obligations under the sale and purchase agreement.
The nuclear assets continue to be a millstone around the company’s neck.
Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s technical picture
Despite last week’s bounce, investors in CBI can expect a long term turnaround only if the stock takes out the 200 day line at the $34 level, and maintains a close above $31 (a long term support/resistance line) for a credible period of time.