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Kick Off: Woodside Petroleum Limited versus Computershare Limited

In game 3 of the semi-finals of the Motley Fool’s ASX World Cup, we have Australia’s largest independent oil and gas producer Woodside Petroleum Limited (ASX: WPL) up against global share registry Computershare Ltd (ASX: CPU).

Woodside has already accounted for some strong opponents including Oil Search Limited (ASX: OSH) and Santos Limited (ASX: STO). Computershare has performed likewise, upsetting CSL Limited (ASX: CSL) and Brambles Limited (ASX: BXB).

So, let’s take a look at how the two teams line up…

Measure Woodside Computershare
Market Capital $34.1 billion $6.9 billion
P/E ratio 14.8x 19.3x
Dividend Yield 5.6% (fully franked) 2.4% (partly franked)
Shareholder return – 10 years 12.3% 18.4%
Forecast earnings growth – 2 years 11.6% 11.1%

Source: Commsec, CapitalIQ

Based simply on P/E ratios, Woodside looks to have the upper hand, and given the company’s generous fully franked dividend of 5.6%, scores and takes a 1-0 lead over Computershare. But with falling LNG prices, that represents a threat to Woodside’s existing LNG operations and a major threat to its proposed Browse and Sunrise LNG projects. An own goal levels the scores 1-1.

Computershare is heavily exposed to the recovering US economy and the potential for US interest rates to rise, which should be great news for Computershare and its fans/shareholders. The company holds a substantial float (around $14 billion) which it earns interest on, and increasing capital markets activity (mergers and acquisitions) means more demand for the company’s services. Computershare scores, and takes the lead 2-1.

Woodside is struggling against the class of Computershare, and while the current dividends are attractive, the company is likely to raise capital in future to fund its planned LNG projects. Woodside goes a man down thanks to injury, giving Computershare a heavy advantage.

The share registry goes further ahead 3-1, scoring a goal on the back of analysts underestimating the company’s future potential.

Computershare wins 3 to 1!

Computershare and Woodside are undoubtedly crowd-favourite blue-chips, but the real money is made backing the underrated underdog. In contrast to Computershare, directors have been BUYING shares in this small company at close to current prices!

This little known ASX company has already delivered eight consecutive years of profit and dividend growth... but with even more growth ahead, the shares are still a firm "BUY" today! Discover The Motley Fool's #1 dividend pick in our newly updated report. Simply click here for your FREE copy right now.

Motley Fool writer/analyst Mike King owns shares in Santos and CSL. You can follow Mike on Twitter @TMFKinga

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