Engineering firm Worley Ltd (ASX: WOR) has reiterated this week that it expects moderate growth in the current financial year, but if the team at Macquarie are to be believed, the stock is relatively cheap at current levels.
Speaking at the company's annual general meeting held on Thursday this week, chief executive officer Chris Ashton said Worley had delivered a strong result in FY25, "in a complex global environment marked by economic and political shifts which impacted our customers' investment decisions''.
He went on to say:
Our result reflects the fourth year of consistent growth in revenue, earnings and margin through the disciplined execution of our strategy.
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Steady growth the target
The company's strategy going forward, he said was defined by the three pillars of strengthen, expand and innovate.
Worley, Mr Ashton said, was also not seeking to chase large "lump-sum" projects, preferring to secure longer-term, sustainable work.
Our overall mix of work is anchored in lower-risk reimbursable contract models. This is deliberate. It supports our quality of earnings, protects downside and aligns our incentives with our customers' success.
On the outlook for the current year, Mr Ashton said, as previously announced in August, the company was expecting "moderate growth", with more work weighted to the second half of the year than was usual.
We're targeting higher growth in revenue than FY25 and growth in underlying EBITA. Whilst we continue to operate in a challenging environment, we remain confident in the strength of our diversified business model, global scale and capability, and market trends which continue to support medium to long-term growth.
Shares looking cheap
The Macquarie team have had a look at Worley's projections, and believe the shares look like good value buying at the moment.
The Macquarie analysts said it was encouraging that there were buoyant conditions flagged in the areas of resources and liquefied natural gas, and said "we think (the) US power sector is prospective and AI adoption could provide market upside".
Macquarie now has a $15.75 price target for Worley shares (reduced from $16), compared with the close of $13.22 on Thursday.
Factoring in dividends this would equate to a total shareholder return of 22.8% if that share price were achieved.
Worley narrowly avoided recording a first strike vote against its remuneration report at Thursday's AGM, with 20.3% of votes cast going against its adoption, where 25% equates to a first strike under Australia corporations law.
