Is the Monadelphous Group Limited share price headed even higher?

In 2017, the Monadelphous Group Limited (ASX: MND) share price has soared more than 32% to trade around $15 currently.

It’s a long way from the engineering group’s 5-year low of $5.32, set in mid-December 2015, and heading towards the 3-year high of $16.60 set in July 2014.

The consulting, construction and engineering company had been hard hit by the downturn in the resources sector with revenues consistently sinking each year since 2013. Sales revenue for the six months to end of December 2016 continued that trend, falling 14.4% compared to the prior year. Net profit was similarly down 24.1% on the previous corresponding period.

But what has been driving Monadelphous’ share price higher is the fact the company keeps announcing new contract wins in 2017. In February, the company said it had won $700 million in new work since the start of July 2016. Since then, Monadelphous has announced more substantial contracts, including a 5-year contract to provide maintenance services for Woodside Petroleum Limited (ASX: WPL) worth $600 million.

Those contract wins may suggest that the mining and petroleum services sector may be picking up again – as we outlined earlier this month.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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