Wednesday, December 19, 2012

CBI Earnings Guidance

Chicago Bridge and Iron (CBI) updated its earnings guidance for FY13 on Wednesday Dec 19th. The company is projecting earnings per share between $3.35-3.65 for the year, compared to analyst consensus of $3.51. CB&I’s guidance on revenue of $6.3-6.7 billion is more optimistic than the consensus of $6.26 billion. CB&I further expects new awards of $7-10 billion in 2013. A special dividend of $0.05, scheduled for Dec 31st, has earlier been declared.

In addition to the earnings guidance, the company announced its shareholder’s approval of the acquisition of the Shaw Group. Over 90% of shareholders voted in favor of the $3 billion deal that is planned to be completed in the first quarter of 2013. The shareholders of Shaw still have to approve the deal in a vote on Friday Dec 21st.

The CB&I stock jumped 4.46% to $44.47 on these news today. Looking forward, we will keep CB&I as a BUY. Our thesis needs to be updated with the upcoming acquisition, but we are expecting a significant growth in revenue and new awards in 2013. The Shaw acquisition will allow CB&I to expand and diversify its competitiveness in power generation.

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