Worley (ASX:WOR) - Share price, News & Analysis

Q: What is the Fair Price of WOR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

WOR (A$14.2) is trading below our estimate of [[fair value]] (A$18.83)

WOR fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	3/6
Past Performance	4/6
Financial Health	5/6
Dividends	2/6

WOR Stock Overview

Worley Limited provides professional project and asset services to energy, chemicals, and resources sectors worldwide.

Rewards

Trading at 24.6% below our estimate of its fair value

Earnings are forecast to grow 15.91% per year

Earnings grew by 84% over the past year

Risk Analysis

Dividend of 3.52% is not well covered by earnings

Large one-off items impacting financial results

Worley Competitors

Ampol

ASX:ALD

AU$7.8b

Yancoal Australia

ASX:YAL

AU$6.6b

New Hope

ASX:NHC

AU$3.5b

Viva Energy Group

ASX:VEA

AU$4.2b

Price History & Performance

Summary of all time highs, changes and price drops for Worley
Historical stock prices
Current Share Price	AU$14.20
52 Week High	AU$15.69
52 Week Low	AU$8.92
Beta	1.93
1 Month Change	5.58%
3 Month Change	2.53%
1 Year Change	26.00%
3 Year Change	5.81%
5 Year Change	16.78%
Change since IPO	735.29%

Recent News & Updates

Jun 28

Is Worley (ASX:WOR) Using Too Much Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

May 13

Calculating The Fair Value Of Worley Limited (ASX:WOR)

How far off is Worley Limited ( ASX:WOR ) from its intrinsic value? Using the most recent financial data, we'll take a...

Shareholder Returns

	WOR	AU Energy Services	AU Market
7D	-0.8%	0.05%	1.1%
1Y	26.0%	18.1%	-8.1%

Return vs Industry: WOR exceeded the Australian Energy Services industry which returned 18.1% over the past year.

Return vs Market: WOR exceeded the Australian Market which returned -8.1% over the past year.

Price Volatility

Is WOR's price volatile compared to industry and market?
WOR volatility
WOR Average Weekly Movement	4.3%
Energy Services Industry Average Movement	7.7%
Market Average Movement	10.5%
10% most volatile stocks in AU Market	17.8%
10% least volatile stocks in AU Market	4.7%

Stable Share Price: WOR is less volatile than 75% of Australian stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: WOR's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2001	47,700	Chris Ashton	https://www.worley.com

Worley Limited provides professional project and asset services to energy, chemicals, and resources sectors worldwide. The company offers digital, consulting, engineering and design, construction management, construction and fabrication, project management, and operation and maintenance services, as well as maintenance, modification, and operation services. It serves new energy, power, upstream and midstream, refining and chemicals, and infrastructure markets, as well as mining, minerals, and metals markets.

Worley Fundamentals Summary

How do Worley's earnings and revenue compare to its market cap?
WOR fundamental statistics
Market Cap	AU$7.45b
Earnings (TTM)	AU$143.00m
Revenue (TTM)	AU$9.31b

52.1x

P/E Ratio

0.8x

P/S Ratio

Is WOR overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
WOR income statement (TTM)
Revenue	AU$9.31b
Cost of Revenue	AU$8.75b
Gross Profit	AU$560.00m
Other Expenses	AU$417.00m
Earnings	AU$143.00m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Aug 24, 2022

Earnings per share (EPS)	0.27
Gross Margin	6.02%
Net Profit Margin	1.54%
Debt/Equity Ratio	34.5%

How did WOR perform over the long term?

See historical performance and comparison

Dividends

3.5%

Current Dividend Yield

183%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is WOR undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for WOR?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for WOR. This is calculated by dividing WOR's market cap by their current preferred multiple.
What is WOR's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	AU$7.45b

WOR key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1x
Enterprise Value/EBITDA	16.8x
PEG Ratio	3.3x

Price to Earnings Ratio vs Peers

How does WOR's PE Ratio compare to its peers?

WOR PE Ratio vs Peers

The above table shows the PE ratio for WOR vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	11.9x
ALD Ampol	13.9x	-0.06%	AU$7.8b
YAL Yancoal Australia	8.3x	n/a	AU$6.6b
NHC New Hope	7.5x	8.8%	AU$3.5b
VEA Viva Energy Group	18x	-3.2%	AU$4.2b
WOR Worley	52.1x	15.9%	AU$7.4b

Price-To-Earnings vs Peers: WOR is expensive based on its Price-To-Earnings Ratio (52.1x) compared to the peer average (11.9x).

Price to Earnings Ratio vs Industry

How does WOR's PE Ratio compare vs other companies in the Global Energy Services Industry?

Price-To-Earnings vs Industry: WOR is expensive based on its Price-To-Earnings Ratio (52.1x) compared to the Global Energy Services industry average (20.1x)

Price to Earnings Ratio vs Fair Ratio

What is WOR's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

WOR PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	52.1x
Fair PE Ratio	36.1x

Price-To-Earnings vs Fair Ratio: WOR is expensive based on its Price-To-Earnings Ratio (52.1x) compared to the estimated Fair Price-To-Earnings Ratio (36.1x).

Share Price vs Fair Value

What is the Fair Price of WOR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: WOR (A$14.2) is trading below our estimate of fair value (A$18.83)

Significantly Below Fair Value: WOR is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is lower than the current share price.

Discover undervalued companies

Future Growth

How is Worley forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

15.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: WOR's forecast earnings growth (15.9% per year) is above the savings rate (1.8%).

Earnings vs Market: WOR's earnings (15.9% per year) are forecast to grow faster than the Australian market (6.2% per year).

High Growth Earnings: WOR's earnings are forecast to grow, but not significantly.

Revenue vs Market: WOR's revenue (6.4% per year) is forecast to grow faster than the Australian market (5.8% per year).

High Growth Revenue: WOR's revenue (6.4% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: WOR's Return on Equity is forecast to be low in 3 years time (7.6%).

Discover growth companies

Past Performance

How has Worley performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

23.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: WOR has a large one-off loss of A$126.0M impacting its December 31 2021 financial results.

Growing Profit Margin: WOR's current net profit margins (1.5%) are higher than last year (0.7%).

Past Earnings Growth Analysis

Earnings Trend: WOR has become profitable over the past 5 years, growing earnings by 23.1% per year.

Accelerating Growth: WOR's earnings growth over the past year (84%) exceeds its 5-year average (23.1% per year).

Earnings vs Industry: WOR earnings growth over the past year (84%) exceeded the Energy Services industry -1.8%.

Return on Equity

High ROE: WOR's Return on Equity (2.6%) is considered low.

Discover strong past performing companies

Financial Health

How is Worley's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: WOR's short term assets (A$2.8B) exceed its short term liabilities (A$2.5B).

Long Term Liabilities: WOR's short term assets (A$2.8B) exceed its long term liabilities (A$2.0B).

Debt to Equity History and Analysis

Debt Level: WOR's net debt to equity ratio (24.5%) is considered satisfactory.

Reducing Debt: WOR's debt to equity ratio has reduced from 67% to 34.5% over the past 5 years.

Debt Coverage: WOR's debt is not well covered by operating cash flow (19%).

Interest Coverage: WOR's interest payments on its debt are well covered by EBIT (6.7x coverage).

Balance Sheet

Discover healthy companies

Dividend

What is Worley current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

3.52%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: WOR's dividend (3.52%) is higher than the bottom 25% of dividend payers in the Australian market (2.64%).

High Dividend: WOR's dividend (3.52%) is low compared to the top 25% of dividend payers in the Australian market (6.4%).

Stability and Growth of Payments

Stable Dividend: WOR's dividend payments have been volatile in the past 10 years.

Growing Dividend: WOR's dividend payments have fallen over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (183%), WOR's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (88.6%), WOR's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

5.5yrs

Average management tenure

CEO

Chris Ashton

2.5yrs

Tenure

AU$3,803,000

Compensation

Mr. Robert Christopher Ashton, also known as Chris, serves as Chief Executive Officer, Managing Director and Director at Worley Limited since February 24, 2020. Mr. Ashton served as Chief Operating Officer...

CEO Compensation Analysis

Compensation vs Market: Chris's total compensation ($USD2.65M) is about average for companies of similar size in the Australian market ($USD2.52M).

Compensation vs Earnings: Chris's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: WOR's management team is seasoned and experienced (5.5 years average tenure).

Board Members

Experienced Board: WOR's board of directors are considered experienced (3.7 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/10 00:00
End of Day Share Price	2022/08/10 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30