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Chicago Bridge & Iron (CBI) - Stock Analysis

August 24, 2013 | About:
David Kerr

David Kerr

12 followers
Chicago Bridge & Iron Company (CBI) is a large engineering, procurement and construction company founded in 1889 that focuses heavily on providing engineering and construction services to power plants and energy companies.

One of the main things that makes Chicago Bridge & Iron so interesting to me at this point in time is their involvement in the high activity of building the infrastructures needed to support the rapidly increasing production of natural gas and liquids due to the influx of available shale in the U.S. There is a high demand for CB&I’s services, and the number of infrastructures in the U.S. related to natural gas is expected to continue to increase through at least 2020.

Chicago Bridge & Iron has also recently acquired one of its competitors, Shaw Group, in December of 2012. According to Philip K. Asherman, President and CEO of CB&I, this new acquisition now makes CB&I “the most complete energy infrastructure focused company in the world.”

Fundamentals

Chicago Bridge & Iron is currently trading close to its 52-week high and has a current P/E ratio of 20.22 with a Forward P/E ratio of 11.94. Some of the statistics that I find alluring about CBI are its Operating Margin of 8.3% (higher than 84% of its peers) and its 22.1% Return on Equity (higher than 95% of its competitors).

CBI has doubled its earnings from .52 cents per share in Q3 of 2010 to $1.04 per share in Q2 of 2013, beating estimates ten out of the twelve quarters. According to analysts, this trend in rising earnings isn’t going to stop here. Below is a chart displaying the 140% increase in share price of the company during this period.

1377294714732.png

Analysts and Gurus

Thomson Reuters currently has CBI rated as “Positive”, while SmartConsensus has it rates as a “Buy”. Standard & Poor’s has CBI at a rating of 4 stars.

In the first quarter of 2013, Warren Buffett purchased 6,508,600 shares of CBI at an average of $52.76 a share as the newest addition to his portfolio. He has since added to his holdings of CBI in the second quarter of 2013 by purchasing an additional 3,042,155 shares at an average price of $58.09 a share. Chicago Bridge & Iron is currently trading at $61.37.

What I Like To Look For

Market Cap: $6.59 billion

P/E Ratio: 20.22

Forward P/E Ratio: 11.94

P/B Ratio: 3.2

PEG Ratio: 0.6

Revenue: Average growth of 13.3% over the last 10 years, and 55.3% over the last 12 months.

EBITDA: Average growth of 20.7% over the last 10 years, and 41.5% over the last 12 months.

Earnings: Average growth of 27.5% over the last 5 years.

Peter Lynch Chart:

1377323858356.png

End Notes

Disclosure: No current position held at the time of writing.

Disclaimer: The opinions and ideas in this article are for informational and educational purposes only. They are not a recommendation to buy or sell any stock at any given time. As always, it is imperative for each individual investor to do their own due diligence and perform their own research on any and all stocks before making an investment decision.

About the author:

David Kerr
Previously licensed to sell securities, David now utilizes his knowledge and experience solely for the purpose of growing his own personal portfolio and educating those around him.

Rating: 3.1/5 (12 votes)

Comments

yoramhtm
Yoramhtm premium member - 11 months ago


What about target price??

Thank you.
David Kerr
David Kerr premium member - 11 months ago
Thank you for the question Yoramtm.

Standard & Poor's currently has a 52-week target price of $70.00 as of August 24, 2013.

Thomson Reuters currently has a 52-week average target price (out of 15 analysts) of $71.00 as of August 26, 2013.

Hope this helps.

-David
yoramhtm
Yoramhtm premium member - 11 months ago
Helps very much.

Thank you again David

Yoram

Please leave your comment:


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