Transfield given the nod

Company gets $170 million fibre optic contract.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Yesterday Transfield Services Limited (ASX: TSE) was awarded a second contract to roll out fibre optic cables for the NBN Co in Sydney.

Transfield announced it had been awarded the $170 million contract which comprised Passive Fibre Network design, construction and build drops in central and southeast Sydney with a potential value of up to $300 million. Despite the news, shares in the company closed lower at $1.82.

In a bid to boost rollout around the country, the NBN Co is looking to award companies secondary contracts to reduce the likelihood of another downgrade in its network delivery forecasts, already downgrading it from 286,000 to between 155,000 and 175,000 homes by June 30 this year.

After being awarded $159 million in contracts for its infrastructure business in early March, it was again rewarded this month with a 10-year $190 million contract with the Mornington Peninsula Shire in Victoria.

Transfield remains a diversified company with operations in asset management, maintenance and project management across many industries including mining, rail and public transport, water, power, telecommunications, facilities management and defence. Despite this, investors have shunned the company, with a 49% drop in its share value from this time 24 months ago.

After flat first-half FY13 results, investors responded with an 8.5% sell off, slowly snowballing the company downwards. However, management believes that the flat results were the product of depreciation of assets and infrastructure costs and expects further gains in 2HFY13.

Foolish takeaway

Competitor United Gas Limited (ASX: UGL) realised a 10% rise in share price yesterday when the company announced it seeks to split its engineering and property service businesses. Perhaps many of Transfield’s investors have jumped ship to UGL and Downer EDI Limited (ASX: DOW) but it seems the luck might be starting to turn in Transfield’s favour.

Need more gas for your investing portfolio? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More Reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »