The Monadelphous Group Limited (ASX: MND) share price has been amongst the better performers on the market this afternoon.
The engineering company’s shares are up 1.5% to $16.24 at the time of writing after announcing a new contract win.
What contract has Monadelphous Group won?
According to the release, the engineering company has been awarded a major contract with mining giant BHP Billiton Limited (ASX: BHP) subsidiary BHP Billiton Iron Ore Pty Ltd.
The contract is for the provision of general maintenance services for shutdowns, outages, and minor capital works, totalling approximately $240 million over a three year period.
The contract, which also contains two one-year extension options, involves the provision of general maintenance services at BHP’s Mt Whaleback, Jimblebar, Eastern Ridge, Mining Area C, and Yandi mine sites which are all located in the Pilbara region of Western Australia.
This isn’t the first time the two companies have worked together. Over the last two decades Monadelphous has assisted BHP with numerous construction and maintenance projects.
The company’s managing director, Rob Velletr, appeared to be pleased with the contract award.
He stated that: “The award of this contract is a testament to our reputation for delivering customer-focussed engineering solutions and maintaining a high standard of safety and quality.”
Before adding that: “We look forward to further developing our relationship with BHP over coming years, growing our operational footprint in the Pilbara and continuing to strengthen our long-term commitment to the region and the communities in which we operate.”
Should you invest?
I agree with Mr Velletr on what this contract award says about the quality of Monadelphous’ business and believe it will not be the last time the two parties work together.
All in all, while it isn’t the biggest contract in the world, it will be a nice boost to the company’s top line over the next three years. And if the company can continue to win more contracts from other miners, it could underpin solid earnings growth over the coming years.
However, despite this, I feel its shares are about fair value at this point for its current growth profile and so I wouldn’t be in a rush to invest just yet.
But if you're not keen on miners or mining services companies then I would suggest you look at these high-flying blue chip shares instead.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.