FTI - Embedded Expectations Analysis - 2020 11 19
TechnipFMC plc (FTI:USA) currently trades at a premium relative to UAFRS-based (Uniform) assets, with a 1.1x Uniform P/B. Even at these levels, the market has bearish expectations for the firm, and management may be concerned about the Surface Technologies segment, iComplete's improvements, and margin growthSpecifically, management may lack confidence in their ability to sustain margin growth and the Surface Technologies segment's increasing backlog. In addition, they may have concerns about their clients' ability to fund projects. Furthermore, management may lack confidence in their ability to compete in the Subsea systems market, reduce pandemic-related expenses, and continue securing contracts. Moreover, they may be exaggerating the efficiency improvements provided by iComplete and the resilience of the Surface Technologies segment. Finally, management may be concerned about their engineering teams and the market potential of blue and green hydrogen
TechnipFMC is global leader in oil and gas projects, technologies, systems, and services. Co. offers subsea, surface, onshore, and offshore solutions for oil and gas projects. Co. serves customers worldwide. With Co.'s technologies and production systems, integrated expertise, and comprehensive solutions, Co. is transforming Co.'s clients' project economics. Co. is uniquely positioned to deliver greater efficiency across project lifecycles from concept to project delivery and beyond. Through innovative technologies and improved efficiencies, Co.'s offering unlocks new possibilities for Co.'s clients in developing their oil and gas resources.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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