Buy, sell or hold? Amec Foster Wheeler investors still affected by low oil prices

27th August 2015

As Amec Foster Wheeler reports its interim results Graham Spooner, investment research analyst at The Share Centre, explains what they mean for investors.

Low oil prices continue to negatively affect Amec Foster Wheeler, this morning’s interim results show. The group reported that it expects these challenging conditions to continue, putting pressure on margins. Investors should note that expectations for the full year remain unchanged.

Amec’s business prospects have been hurt by the fall in oil prices as customers delay upstream capital expenditure.

However, the diverse nature of the company has seen other markets counteract falling demand, whilst downstream markets, especially for petrochemicals, were described as being resilient. Furthermore, the group is currently involved in European nuclear and transmission & distribution markets.

Compared to its peer group, Amec’s share price performance has been relatively good given its diversification both by geography and sectors. On a prospective price to earnings basis of 9.5 times, the group looks more attractive in comparison to its peers. We currently recommend Amec as a long term ‘buy’.

This is a stock for those looking for a mixture of growth and income and willing to accept a medium level of risk, however, investors must be aware that a further fall in the price of oil poses a clear risk to the business.


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