TechnipFMC Has Not Become Overvalued, Despite Its Spectacular Rally
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Aristofanis Papadatos8.83K FollowersFollow5ShareSavePlay(11min)CommentsSummaryTechnipFMC has delivered a 132% total return in about two years, driven by robust backlog growth and strong business momentum.FTI's global diversification and consistent contract wins position it for continued growth despite a challenging oil price outlook.The stock trades at a premium to peers, but justifiably so, given superior earnings growth and a $16.8B backlog covering 1.7 years of revenue.I recommend holding FTI, as its valuation is reasonable relative to forward growth, though investors must tolerate oil sector cyclicality. EyeEm Mobile GmbH/iStock via Getty Images About two years ago, I analyzed why TechnipFMC (FTI) was reasonably valued back then, despite its 98% rally in the preceding 12 months. Since that article, the stock has offered an outsized total return ofThis article was written byAristofanis Papadatos8.83K FollowersFollowI am a chemical engineer with a MS in Food Technology and Economics, and a MENSA member. I am the author of the book "Investing in Stocks and Bonds: The Early Retirement Project" (2024):I am also the author of the book "Mental Math: How to perform math calculations in your mind".I am also the author of 2 other mathematics books ("Arithmetic calculations without a calculator" and "Word Problems") and perform almost all the calculations in my mind, without a calculator, making it easier to make immediate investing decisions among many alternatives. I invest applying fundamental and technical analysis and mainly use options as a tool for both investing and trading. I achieved my goal of financial independence at the age of 45. In my spare time, I follow Warren Buffett's principle: "Some men read playboy. I read financial statements".Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow does TechnipFMC's geographic diversification impact its risk profile?FTI generates over 90% of revenue outside North America, reducing vulnerability to U.S. shale downturns and supporting resilience amid oil price volatility.Is FTI's valuation justified relative to peers given its growth outlook?FTI trades at 16.8x 2026E earnings, above peers, but this is warranted by faster expected EPS growth, a rising backlog, and superior contract momentum.What are the key risks and capital allocation positives for FTI?A sharp oil price collapse could pressure FTI's revenues, but its $2B buyback (11% of shares) and strong free cash flow underpin financial flexibility.Recommended For You