Worley Parsons Limited (WOR)

By Jason Fittler 

WOR provides professional services to the oil & gas, power, minerals & metals and infrastructure & environment industries, including feasibility studies, design, project services, upgrade services and maintenance services.

WOR service capability covers the entire asset lifecycle: from identifying the opportunity to the operating phase.

This week WOR has downgraded their profit guidance by around 13%. On the back of this we saw the price fall 25% or around $5.50. It is currently trading around the low $16.00 mark.

The revision in revenue is due to the slow ramp up of contracts in Canada. The tough trading conditions in both Australia and Canada I am sure also contributed.  WOR will need to double its production in the second half of the year to meet current guideline.

The question now, is WOR cheap enough to buy or will there be more bad news to come.

With the market so high volatility is to be expected.  The projected dividend yield of 2014 was 6.3% partly franked.

Our valuation on the company is $20 as such this company has the yield and growth boxes both ticked.

However, don’t rush in on this one. 

Although the company was trending down prior to this announcement most research houses had a buy recommendation on the company. This indicates that the news may have been a surprise.

As a result, we see more selling out over the coming month.

For more information on Worley Parsons Limited (WOR) please contact us on 07 4771 4577.