Market Overview

D.A. Davidson Comments On The Engineering And Construction Sector, Offers Top Picks


John Rogers of D.A. Davidson commented in a note on Wednesday that recent declines in oil prices will “undoubtedly” slow spending on some oil and gas sector work, which may prove beneficial to consumers but could hurt engineering and construction firms.

Rogers notes that shares of most engineering and construction firms have declined sharply as of late, even those with minimal exposure to oil and gas projects.

“The pace of growth remains subdued relative to previous recoveries,” Rogers wrote. “We expect the recent oil price drop, global macro concerns and a lack of inflation will continue to encourage a cautious pace of investment by owners over the near-term. The collapse in oil prices is likely to substantially change the investment appeal of some major construction projects; however, demand in other sectors could increase.”

The analyst adds that overall the impact of lower oil and gas prices should encourage construction spending, especially if the price decline is a function of supply growth outpacing demand gains. However, Rogers cautions that these benefits will be far from uniform among firms.

Bottom line, the selloff seen in engineering and construction firms has brought valuation levels below historical norms. Rogers suggests that shares of many firms may be “attractive” and “generally compelling” based on current prices relative to his outlook for earnings and cash-flow along with historical results.

Rogers notes that shares of the following stocks are all Buy rated based on each company's prospects relative to current share price levels:

Chicago Bridge & Iron Company N.V. (NYSE: CBI)

Dycom Industries, Inc. (NYSE: DY)

Emcor Group Inc (NYSE: EME)

Comfort Systems USA, Inc. (NYSE: FIX)

Fluor Corporation (NYSE: FLR)

Great Lakes Dredge & Dock Corporation (NASDAQ: GLDD)

Jacobs Engineering Group Inc (NYSE: JEC)


Mastec, Inc. (NYSE: MTZ)

Quanta Services Inc (NYSE: PWR)

Primoris Services Corp (NASDAQ: PRIM)

Tutor Perini Corp (NYSE: TPC)

Latest Ratings for CBI

Apr 2018CitigroupMaintainsNeutralNeutral
Dec 2017DA DavidsonDowngradesBuyNeutral
Nov 2017Credit SuisseMaintainsNeutral

View More Analyst Ratings for CBI
View the Latest Analyst Ratings


Related Articles (CBI + DY)

View Comments and Join the Discussion!

Posted-In: DA Davidson Engineering And Construction gas prices John Rogers oil pricesAnalyst Color Analyst Ratings

Latest Ratings

MRTXHC Wainwright & Co.Maintains257.0
NVDATruist SecuritiesMaintains672.0
BLKBMO CapitalMaintains715.0
BLKDeutsche BankMaintains838.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at