Will Weir Group PLC outperform Petrofac Limited, Amec Foster Wheeler PLC and Rolls-Royce Holding PLC after update?

Does Weir Group PLC (LON:WEIR) (WEIR.L) offer a more positive outlook than Petrofac Limited (LON:PFC) (PFC.L), Amec Foster Wheeler PLC (LON:AMFW) (AMFW.L) and Rolls-Royce Holding PLC (LON:RR) (RR.L)?

Weir Group PLC
Weir Group PLC

Weir Group PLC (LON:WEIR) (WEIR.L) has gained over 8% today after the release of a trading update. Investors seem to be positive about the company’s outlook.

It has seen a stronger recovery than expected in its North American markets. It has benefitted from higher levels of frack fleet utilisation and significant tightening of industry capacity. Weir Group has therefore seen increased volumes, stronger operating leverage and modest pricing recovery which are ahead of prior expectations. It has been able to deliver low double-digit operating margins in H1.

The division is now forecast to deliver low-teens operating margins through H2, with full year revenues and operating profits that are above the upper end of analyst estimates.

The updated outlook for Weir’s full year performance is now for strong constant forex revenue as well as profit growth. Profits will be weighted towards H2.

In my opinion, today’s update is positive for investors in Weir. I think it shows the company is making progress with its strategy and is well-placed to benefit from an improving outlook for its markets.

In the last year, the Weir Group share price has risen 26%. That’s a better performance than other industrial stocks such as Petrofac Limited (LON:PFC) (PFC.L), Amec Foster Wheeler PLC (LON:AMFW) (AMFW.L) and Rolls-Royce Holding PLC (LON:RR) (RR.L). The Petrofac share price is down 43%, Amec Foster Wheeler has dropped 6% and Rolls-Royce is up 22%.

In my opinion, Weir Group has investment potential for the long run. I feel it has a sound business which could be ready to deliver improving performance given a better outlook for its industry. I’d rather own Rolls-Royce due to what I see as a better risk to reward opportunity, but I’m also of the view that Weir Group could continue to perform relatively well from an investment perspective in the long run.

About Robert Stephens 3883 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page