Today’s update from specialist engineering company IMI (LSE: IMI) is rather mixed and shows that trading conditions continue to be challenging. While it’s on target to meet previous guidance, IMI expects organic revenues in the first half of the year to show a similar percentage reduction to that experienced in the 2015 full year, with margins due to be 250 basis points lower than in the first half of the previous year.

However, IMI expects an improved performance in the second half of the current year, with cost-saving initiatives and business improvement measures set to have a positive impact on the company’s performance. Despite this, IMI is still forecast to record a 17% fall in its bottom line this year. As such, investor sentiment could decline and put the company’s share price under a degree of pressure.

Looking ahead to next year, IMI is due to bounce back with growth of 10% in its net profit. This puts it on a price-to-earnings-growth (PEG) ratio of 1.6 and indicates that while it’s experiencing a tough period, for long-term investors, IMI could be a sound buy with 20% upside.

Strong order book

Also reporting today was Costain (LSE: COST), with the engineering solutions provider having its AGM and updating on recent progress. It remains on track to meet previous guidance and with a record order book, it seems to be well-placed to deliver strong growth over the long term.

With Costain expected to increase its bottom line by 6% this year and by a further 14% next year, it seems to be performing well. And with it having a high degree of earnings visibility due to the aforementioned high level of orders, it could prove to be a relatively low-risk play. Furthermore, with Costain trading on a PEG ratio of only 0.7, it offers 20%-plus capital growth potential over the coming years. Its dividend yield of 3.8% also has huge appeal – especially since dividends are covered more than twice by profit and could therefore rise at a rapid rate.

Contract win

Meanwhile, shares in Filtronic (LSE: FTC) have risen by as much as 30% due to the announcement of a new contract win. The designer and manufacturer of microwave electronic products for the wireless telecoms infrastructure market has received further substantial production orders for its new range of integrated antennas from a major European OEM. The orders are valued at over $24m and are follow-ons to previously announced orders of $13.8m.

Clearly, this is excellent news for Filtronic and shows that market acceptance of its new antenna products is increasing. Although it remains a relatively small and high risk stock which is difficult to forecast since demand for its products is subject to uncertain changes to market demand, Filtronic could be worth a closer look for less risk-averse investors and may rise by another 20%.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended IMI. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.