Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
To the MM Team, My question relates to Worley. The SP has dropped 18% in the last 12 months and 5% in the October. I note that most analysts have the stock as a buy with a target price of around $17-18 (25% possible upside). What has caused the loss in confidence in WOR? Is it the high PE or questions about future growth? I would like to hear your latest views. And, if you were not a holder would you consider buying in at these levels? Keep up the great work, Charles
Hi Charles,
WOR’s Est. P/E for 2025 is 16.4x, which is around the average of the last 5-years so the lacklustre performance is not around value.
August FY24 result was mixed with topline revenue a slight miss, though underlying profit was a beat, and guidance was solid, but, they did comment that FY25 looks to have less intensity around the energy transition than FY24, some of the urgency coming out the market.
“Net Zero” is proving slower than most people hoped/expected and this has impacted WOR’s pipeline of work, but we believe they are in the right space, and over time, that will lead to higher margin work that will underpin higher profitability, which has been an issue for WOR over the years.
We believe WOR offers significant earnings leverage for a potential massive increase in global energy investment and decarbonisation projects – a case of when not if!
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