Kentz (KENZ) delivered another stellar year of double-digit earnings growth in 2012 that capped off a remarkable five years since the oil services group first listed in London. We first tipped the company's shares in early 2009 and, although they've delivered a 260 per cent return since then - excluding dividends - we continue to see value in them today.
That's because, as our detailed article on the oil services sector pointed out two weeks ago, valuations in the sector are still low by historic standards and none more so than Kentz's. Trading on less than 10 times forward earnings for 2013, shares in Kentz are undervalued compared with peers on an average of 12 times forward earnings. That could be because of Kentz's partial exposure to a faltering mining sector, but that sector only comprises a fifth of total revenues and any further weakness from this segment should be mitigated by growth in oil services elsewhere.
To that end, Kentz has signed contracts for about 75 per cent of forecast work for 2013 and its current work backlog has increased to $2.73bn (£1.8bn), up 6 per cent since the year-end and 14 per cent ahead on last year.
Broker Investec forecasts fully diluted EPS of 65.3¢ for 2013, rising to 70.9¢ in 2014 (from 58¢ in 2012).
KENTZ CORPORATION (KENZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 429p | MARKET VALUE: | £505m | |
| TOUCH: | 428-429p | 12-MONTH HIGH: | 500p | LOW: 324p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 236¢ | NET CASH: | $223m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 0.64 | 36.0 | 21.0 | 5.7 |
| 2009 | 0.71 | 44.5 | 26.5 | 6.0 |
| 2010 | 1.06 | 67.5 | 40.7 | 10.0 |
| 2011 | 1.37 | 79.4 | 50.6 | 12.3 |
| 2012 | 1.41 | 104.8 | 60.0 | 14.5 |
| % change | +3 | +32 | +19 | +18 |
Ex-div: 24 Apr Payment: 24 May £1=$1.51 | ||||
