Foster Wheeler: Good News, Bad News (FWLT, DOW, KBR, QQQQ)

Heavy construction and engineering giant Foster Wheeler (NASDAQ:FWLT) got some bad news today: it was beaten out by KBR, Inc. (NYSE:KBR) for a project management and front-end engineering and design contract on Saudi Arabia’s massive Ras Tanura petrochemical plant construction project. Dow Chemical (NYSE:DOW) and Saudi Aramco have formed a joint venture to build the Ras Tanura plant and plan to offer 30% of the $20 billion project to additional partners.

But FWLT also got some good news today: its stock is being added to the Nasdaq 100 index (NASDAQ:QQQQ), effective today. The company was added to the Russell 1000 earlier this year. That’s good news for a company that paid millions of dollars in asbestos-related personal injury claims and was delisted at the NYSE in November 2003. Foster Wheeler was even forced to execute a 20-for-1 reverse stock split in November 2004. The company’s stock traded on the OTC Bulletin Board from November 2003, until June 2005, when it listed on NASDAQ. Zacks has projected annual growth for FWLT of 23% over the next five years, nearly 10 points better than the expected growth for the industry as a whole.

That kind of growth brings to mind a couple of interesting questions. How long before FWLT once again seeks a listing on the NYSE? Will the ‘FWLT tenure on the NASDAQ 100’ set a record for the shortest term ever?  So far shares are focusing on the index addition as shares are trading up more than 1% around $118.00.

Paul Ausick
July 12, 2007