AMEC plc : Head and shoulders' power
Amec provides consulting, engineering and project management services to the world’s energy, power and process industries. The company manages delivery of major industrial and infrastructure projects, such as power networks, and supplies engineering, procurement and construction management services or the energy and mining industries. The most important activity is concerning natural resources, as oil, gas and mining.
On 16th April, the English group released sales results, showing revenues on the increase of 13%, and the management confirmed outlook of “double digit” growth for full year 2012.
The company is quite geographic diversified; more than 80% of its 2011 revenues are concentrated in three countries, United Kingdom (30%), Canada (28%) and United States (25%). Its 2011 revenues in Minerals & Metals branch came from companies with a market cap above $60 billion, according to JP Morgan data. An important point of its strategy for 2015 is to rise the share of revenue from major mining groups.
Currently the share is trading 15 times earnings per share estimates for 2012, according Thomson Reuters’ consensus, in line with average of its sector.
Graphically, the share after a strong bullish trend, reached GBp 1171 long-term resistance, which has stopped this movement. The upward trend is set up thanks to a particular technical pattern, known as an inverted “head and shoulders”, which we can see in weekly data in the second half of 2011. Now we are close to end of this movement; we think the share could come back to historical highs, thanks to support of moving average. We fix a target price at GBp 1260 with a stop loss below GBp 1071.
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Valuation |
2013e |
2014e |
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PER (Price / EPS)
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13,0x |
11,4x |
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Capitalization / Revenue
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0,76x |
0,71x |
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EV / Revenue
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0,73x |
0,68x |
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EV / EBITDA
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8,46x |
7,52x |
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Yield (DPS / Price)
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3,71% |
4,15% |
| Profitability |
2013e |
2014e |
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Operating Margin (EBIT / Sales)
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7,90% |
8,31% |
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operating laverage (Delta EBIT / Delta Sales)
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5,39x |
1,86x |
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Net Margin (Net Profit / Revenue)
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6,04% |
6,37% |
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ROA (Net Profit / Asset)
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9,95% |
10,1% |
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ROE (Net Profit / Equities)
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23,3% |
23,4% |
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Rate of Dividend
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48,1% |
47,3% |
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