The Austal Limited (ASX: ASB) share price jumped 5.58% higher in yesterday’s trade despite no significant news. The positive momentum looks set to continue this morning following an after-market update on the company’s Littoral Combat Ship (LCS) project.
What did Austal announce yesterday?
Austal announced the future USS Kansas City (LCS 22) has successfully completed acceptance trials in the Gulf of Mexico. This is the eleventh Independence-class LCS designed and built by Austal to reach the important milestone.
Austal’s LCS program is at a full rate of production with 5 ships currently under construction. The company is Australia’s largest defence exporter with FY19 revenue of $1.85 billion.
The USS Oakland recently launched and is preparing for trials while the final assembly is underway on the future USS Mobile.
There was no market-moving news from Austal yesterday, but the Austal share price still climbed higher throughout the day.
What’s been moving the Austal share price in 2019?
Austal shares surged 11.24% higher in just one day following the release of its full-year results in August. The company’s USA shipyard accounts for 80% of the company’s $1.85 billion revenue, with an order book of a further $4.9 billion.
Austal reported 11 new ships ordered with 58 ships scheduled or under construction on top of the 12 already delivered. Closer to home, Austal has delivered 3 of 21 Guardian Class Patrol Boats (GCPBs) for the Australian Government.
Should you buy Austal shares?
The Austal share price is currently valued at $4.35 per share and is just shy of its record-high $4.63 level.
Despite this, Austal shares are still trading at a price-to-earnings ratio of 25x earnings. Given the average amongst the ASX200 isn’t far from the 16–17x earnings mark, they may be a little overpriced.
Austal shares have a net dividend yield of 1.38% at the moment and a market cap of $1.55 billion, which rubber stamps it as a large-cap ASX dividend stock.
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Motley Fool contributor Kenneth Hall 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.
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