Junius
Long/short equity, medium-term horizon, value, growth

Petrofac: Strong Medium-Term Earnings Growth Despite Recent Project Delays

Petrofac Ltd. (OTCPK:POFCY)(PFC.L), the U.K.'s largest oil services company, has seen its shares fall by over 28% over the past year, on concerns that project delays would impact earnings growth for 2014. In November, the company issued guidance that net income for 2014 should show only flat to modest growth, as revenue from big projects in Abu Dhabi and Malaysia have been deferred from 2014 to 2015 and beyond. Despite the re-phasing of big projects, the company can still meet its 2015 medium-term earnings target of $862 million, which represents a doubling of net income from 2010. With the recent sell-off, Petrofac's shares seem oversold and undervalued against its earnings potential for 2015 and beyond.

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