…also shrugs off the 26% increase in the dividend.
Wood Group (LSE: WG) reported some robust growth numbers for the first six months of the year, with revenue up 35.7% and earnings before interest, tax and amortisation (EBITA) -- the company's chosen metric for profitability -- up 53.2%.
Looking below the headlines, we see that a good deal of this growth resulted from the new Wood Group PSN division only being partially counted last year, and underlying growth was closer to 18%. With the shares trading near historical highs and fellow engineering firms AMEC (LSE: AMEC) and Petrofac (LSE: PFC) recently reporting revenue growth of 28% and 20%, respectively, perhaps Mr Market can be excused for its less-than-enthusiastic response.
Still, one might think a 26% increase in the dividend to 17p for the year would be cause for celebration until it is pointed out that even this hefty hike will only raise the yield to 2%.
The market's lackadaisical response aside, the results from Wood Group and its peers would seem to indicate the oil and gas service industry is doing quite well in spite of the economic gloom and doom out there. With a forward price-to-earnings ratio of 15.2, Wood Group looks to be a bit pricey compared to Petrofac, at 12.5, and AMEC, which is on a multiple of 14.3, so I might suggest look to the other two if you're looking to increase your exposure to this sector.
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> Nate does not own any shares discussed above.
