Shaw Group Confession, Trouble for Nuclear Power Players (SHAW, URS, BWC, FLR, ES)

April 11, 2011 by Jon C. Ogg

It’s not likely that earnings and revenues for The Shaw Group Inc. (NYSE: SHAW) took too great a hit from the nuclear disaster in Japan, but what happens for the rest of this year could well be tied to Japan’s success at controlling the damaged nuclear plants. Shaw posted diluted EPS of $0.40 on $1.4 billion in revenues, compared with an EPS estimate of $0.47 on $1.54 billion in revenues, not including the company’s stake in Westinghouse. Including Westinghouse, EPS was a scant $0.01, compared with $0.72 in the same period a year ago.

Shaw also lowered its revenue estimates for the full year from analysts’ expectations of $6.55 billion to $6.3 billion, while raising full-year EPS estimates from expectations of $1.77 to $1.86-$1.91, excluding its stake in Westinghouse. Shaw’s P/E ratio for the trailing twelve months is around 31, while its forward P/E for the fiscal year ending in August 2012 is 13.50. The company is the first of its sector to report, and this downward trend could put some weight on competitors URS Corp. (NYSE: URS), The Babcock & Wilcox Co. (NYSE: BWC), Fluor Corp. (NYSE: FLR), EnergySolutions Inc. (NYSE: ES).  The big fear remains what happens to nuclear policy in many nations going forward.

URS Corp. reports quarterly earnings on May 9th, and analysts are expecting EPS of $0.85 on revenue of $2.43 billion. A year ago, URS posted EPS of $1.17 on revenue of $2.21 billion. For the full year, analysts expect EPS of $3.67 on $9.93 billion, a rise of about 4% in EPS while revenue rises from $9.18 billion to $9.93 billion. The company’s trailing P/E ratio is 12.79, and its forward P/E is 11.31, for the year ending December 2012.

Babcock & Wilcox is scheduled to release quarterly earnings on June 10th, and analysts are expecting EPS of $0.39 on revenue of $731.3 million. For the full year, EPS is expected to be $1.67 on $2.99 billon in revenue. In 2010, Babcock & Wilcox posted EPS of $1.30 on revenue of $2.69 billion. The company’s trailing P/E ratio is 24.49 and its forward P/E is 16 for the year ending in December 2012.

Fluor is set to announce quarterly earnings on May 5th, with analysts expecting EPS of $0.76 on revenue of $5.59 billion. EPS expectations are flat with the same period a year ago, but revenue is projected to be 14% higher. That’s not a good sign for margins. For the full year, EPS  is forecast at $3.28 on $23.9 billion in revenue, substantially better than a year ago’s EPS of $2.30 on $20.9 billion in revenue. The company’s trailing P/E ratio is 35.63 and its forward P/E is 18.09 for the year ending in December 2012.

EnergySolutions reported its fourth-quarter and full-year earnings about 10 days ago, and the company posted a quarterly EPS loss of -$0.25 on revenue of $1.75 billion. For 2010, the company posted EPS of $0.07 on revenue of $450 million. For the first quarter of 2011, the company is expected to post EPS of $0.04 on revenue of $483.43 million, both lower than the same period last year. The company’s trailing P/E ratio is non-existent, and its forward P/E is 16.

Of the five companies, Fluor and EnergySolutions have the highest P/E ratios going forward. Fluor’s trailing P/E is the highest in the group as well, probably indicating that investors think that Fluor is doing something right and will continue to do so. EnergySolutions, given its tepid performance, could be valued the same as Fluor going forward because investors believe that it is a likely takeover target. There’s certainly not much else for the company to look forward to.

In it’s outlook for 2011, EnergySolutions noted that it expects EBITDA in the range of $130-$140 million. For 2010, the company reported EBITDA of $153 million, and EBITDA in 2009 was $143.5 million. A potential buyout is about the only thing investors can be looking forward to.

Shaw stock is down more than -2%, to $34.64, after opening down more than -5%. The 52-week range is $27.61-$41.62.

Paul Ausick