Chicago Bridge & Iron - Aggressive Growth

Chicago Bridge & Iron (CBI) is a Zacks #1 Rank (Strong Buy) which has delivered a strong run of positive earnings surprises. The company is expected to report late next week.

Company Description

Chicago Bridge & Iron Company N.V. provides engineering, procurement, and construction services, as well as process technology solutions primarily to energy and natural resource industries.

Solid streak of Earnings Surprises

CBI has met or beat earnings in each of last six reports, with the smallest beat coming in 5% ahead of expectations. The largest beat was the December 2010, when the company posted EPS of $0.63, $0.08 or 14.5% higher than the Zacks Consensus Estimate.

Those big beats have not always translated into strong moves for the stock. The smallest beat, the June 2011 quarter of 5% outperformance mentioned above, generated the largest price impact (9%) since the streak began. Several big beats have even led to negative price moves.

Earnings Release on February 23

Chicago Bridge & Iron is expected to release earnings in a few weeks and the Zacks Consensus Estimate is calling for EPS of $0.67 and revenues of $1.26 billion. Recent contract wins for CBI have given some investors the hope that the company will deliver strong guidance for 2012.

Valuations

CBI trades at a discount to the industry average for both forward and trailing twelve months PE. In terms of price to book, the company trades at a premium to the industry average carrying a multiple of 3.6x vs. the 1.9x industry multiple. The same is true of price to sales, where the company trades at a slight premium to the industry average.

The Chart

The price and consensus chart gives investors the idea the stock has inched higher as earnings have moved higher. The gap between future earnings and the stock price implies that the stock is trailing the earnings expectations and is somewhat undervalued. Chicago Bridge & Iron is a Zacks #1 Rank (Strong Buy).

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