As Petrofac updates the market Helal Miah, investment research analyst at The Share Centre, explains why he recommends investors ‘buy’ the stock.
This morning Petrofac reported good operational performance and its projects remain in sound shape. Investors will be pleased to hear the group’s order backlog has increased to $11.9bn as it secures another $2.6bn of orders. The company expects modest profit growth for the remainder of the year reflecting project deliveries predicted in the second half of the year. Petrofac remains on track to meet its 2015 earnings target of doubling 2010 group earnings.
We continue to recommend investors ‘buy’ Petrofac. So long as the world economy is energy hungry there will be a continuous demand for services from this type of company. Its share price movement will be very dependent on long term global energy prices, which should remain supported given the world demand/supply dynamics.
Analysis from Profit Watch UK, the quarterly report by The Share Centre, shows:
- 30.5% of FTSE 100 revenues are generated by companies in the Oil & Gas industry, and 26.2% of net profits
- Oil Equipment, Services and Distribution – Petrofac’s sector – saw revenues increase by 19.3% last year, its fastest growth in at least five years
- Revenue growth in the Oil Equipment, Services and Distribution sector was nearly 10 times the rate seen in the wider Oil & Gas Industry in 2012