URS Corporation (URS): Share price defines bullish 'pennant'

Posted Aug 26th 2008 1:35PM by Larry Schutts
Filed under: Earnings Reports, Analyst Upgrades and Downgrades, Technical Analysis, Stocks to Buy

URS Corporation (NYSE: URS) provides engineering, construction and technical services to public agencies and private sector companies around the world. The firm offers a full range of program management; planning, design and engineering; systems engineering and technical assistance; construction and construction management; operations and maintenance; and decommissioning and closure services. Most clients are involved with infrastructure, power, heavy industry and federal programs. URS employs about 50,000, in over 30 countries. Fluor Corporation (NYSE: FLR) and KBR (NYSE: KBR) are major competitors.

The company pleased investors earlier in the month, when it reported Q2 EPS of 72 cents and revenues of $2.53 billion. Analysts had been looking for 60 cents and $2.45 billion. In discussing the solid quarter, the CEO pointed to the firm's success in building capabilities across such growth areas as power and government work. Management also guided FY08 EPS to $2.36-$2.48 ($2.42) and FY08 revenues to $9.8 billion ($9.75B consensus). Morgan Joseph subsequently reiterated its "buy" rating on the shares and boosted its price target to $54.

The URS share price popped on the news and then moved into a bullish "pennant" consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Altogether, brokers now recommend the issue with three "strong buys", four "buys" and four "holds". Analysts see a 22% growth rate, through the next year. The URS P/E ratio (13.42), Price to Sales ratio (0.49), Price to Book ratio (1.06), Price to Free Cash Flow ratio (9.25) and Sales Growth rate (104.03%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 93% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $30.75 and $64.19. A stop-loss of $40.00 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

Tags: fundamental analysis, FundamentalAnalysis, momentum, pennant, technical analysis, TechnicalAnalysis, URS, URS Corporation, UrsCorporation