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Monadelphous share price climbs higher after acquisition news

The Monadelphous Group Limited (ASX: MND) share price has climbed 0.93% higher on the ASX today. 

The big news moving the company’s shares was its acquisition of 2 Chilean businesses today.

What is moving the Monadelphous share price today?

Monadelphous has purchased Chilean based construction and maintenance-based services contractor, Buildtek SpA as well as plant and equipment hire company, Maqrent SpA.

The purchase of 75% of the companies will cost the company $9.5 million in cash with an option for the remaining stake in three years time.

The companies’ founder Victor Valech will stay on in Chile to manage the 700-person operation.

The move will see Monadelphous expand into the potentially lucrative South American market.

How have the company’s shares reacted?

Investors have been bullish on the news as the Monadelphous share price has climbed 0.93% higher to $15.72 per share.

It’s a welcome boost for shareholders given the share price is down more than 18% since late July. The construction engineering company is still up for the year but has underperformed the S&P/ASX 200 Index (ASX: XJO) in 2019.

The company has been busy this year signing new contracts and boosting earnings despite buildings headwinds. The company was awarded a major $100 million contract by Rio Tinto Ltd (ASX: RIO) back in August as well as a lucrative deal with Origin Energy Ltd (ASX: ORG).

What about the other engineering contractors?

It’s been a strong year for many of the ASX engineering contractors. The Seven Group Holdings Ltd (ASX: SVW) share price is up 40.16% so far this year following an earnings rebound.

Seven shares are down 0.75% today, while the ASX 200 Index is trading 0.43% higher at 6,727 points.

Are Monadelphous shares good value?

The Monadelphous share price is trading at $15.72 per share with a tidy 3.05% dividend yield. The company does trade at 29.32x earnings, which means weighing up how much you’re willing to pay for growth.

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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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