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Why the Cimic share price jumped at yesterday’s close

The Cimic Group Ltd (ASX: CIM) share price jumped 0.72% higher in the last 20 minutes of yesterday’s trade, but why?

Why did the Cimic share price jump yesterday?

Cimic’s update about its wholly-owned subsidiary CPB Contractors was the big news yesterday.

CPB Contractors reached contractual close to deliver the Yanchep Rail Extension (YRE) and Thornlie to Cockburn Link (TCL) components of Perth’s METRONET project.

The contract will be delivered with Downer EDI Limited (ASX: DOW) and generate $423 million in revenue for CPB Contractors.

The YRE involves the construction of 3 new stations while the TCL connects 2 existing lines with the construction of 2 new stations.

The Cimic share price jumped as we headed towards the ASX close yesterday, climbing 0.72% higher after the 3:46pm announcement.

That late move dragged the group’s shares back into the positive for the day to close 0.63% higher at $34.95 per share.

How did the rest of the ASX 200 perform?

It was somewhat of a mixed bag for the ASX 200 yesterday.

The S&P/ASX 200 Index (INDEXASX: XJO) edged 0.035% lower to close at 6,847.30 points yesterday.

Shares in Cimic’s METRONET partner Downer EDI slumped 1.07% lower to $8.32 per share. Still, Downer shares have had a considerably better year than Cimic in 2019.

The Cimic share price has plummeted 18.28% lower this year compared to the ASX 200’s 23.20% gains.

In contrast, Downer shares are marginally outperforming this year, having climbed 24.55% higher.

Cimic does offer arguably better relative value and trades at 14.45 times earnings. Downer’s price-to-earnings ratio is 19.68 times, while the Downer dividend (3.37% per annum) is also lower than CIMIC’s 4.49% per annum.

Foolish takeaway

The CIMIC share price jumped higher yesterday afternoon but I’d keep an eye on it this morning too.

Given the 20-minute window investors had to react to the news, we could see some carry over into trade today.

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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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