LSE:PFC

Stock Analysis Report

Executive Summary

Petrofac Limited, an oilfield service company, provides facilities solutions to the oil and gas production and processing industry worldwide.

Rewards

Trading at 27.9% below its fair value

Earnings are forecast to grow 1.42% per year

Became profitable this year

Risk Analysis

Has a high level of debt

Unstable dividend track record

Large one-off items impacting financial results



Snowflake Analysis

Established dividend payer and good value.


Similar Companies

John Wood Group

LSE:WG.

Share Price & News

How has Petrofac's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PFC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-10.2%

PFC

-7.1%

GB Energy Services

-3.0%

GB Market


1 Year Return

-35.8%

PFC

-26.1%

GB Energy Services

11.0%

GB Market

Return vs Industry: PFC underperformed the UK Energy Services industry which returned -25.8% over the past year.

Return vs Market: PFC underperformed the UK Market which returned 12.7% over the past year.


Shareholder returns

PFCIndustryMarket
7 Day-10.2%-7.1%-3.0%
30 Day-10.0%-7.1%-2.4%
90 Day-14.4%-2.9%3.9%
1 Year-31.5%-35.8%-22.6%-26.1%16.8%11.0%
3 Year-55.6%-62.6%-51.3%-56.7%20.0%4.7%
5 Year-37.9%-52.7%-29.6%-41.2%38.9%6.8%

Price Volatility Vs. Market

How volatile is Petrofac's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Petrofac undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PFC (£3.85) is trading below our estimate of fair value (£5.34)

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


Price To Earnings Ratio

PE vs Industry: PFC is good value based on its PE Ratio (7.7x) compared to the Energy Services industry average (10.3x).

PE vs Market: PFC is good value based on its PE Ratio (7.7x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: PFC is poor value based on its PEG Ratio (76.2x)


Price to Book Ratio

PB vs Industry: PFC is overvalued based on its PB Ratio (2.2x) compared to the GB Energy Services industry average (0.9x).


Next Steps

Future Growth

How is Petrofac forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

1.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PFC's forecast earnings growth (1.4% per year) is above the savings rate (0.5%).

Earnings vs Market: PFC's earnings (0.1% per year) are forecast to grow slower than the UK market (11.7% per year).

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

Revenue vs Market: PFC's revenue is expected to decline over the next 3 years (-3% per year).

High Growth Revenue: PFC's revenue is forecast to decline over the next 3 years (-3% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PFC's Return on Equity is forecast to be high in 3 years time (25.4%)


Next Steps

Past Performance

How has Petrofac performed over the past 5 years?

-4.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PFC has a large one-off loss of $91.0M impacting its June 30 2019 financial results.

Growing Profit Margin: PFC became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: PFC's earnings have declined by -4.1% per year over the past 5 years.

Accelerating Growth: PFC has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: PFC has become profitable in the last year, making it difficult to compare its past year earnings growth to the Energy Services industry (86.1%).


Return on Equity

High ROE: PFC's Return on Equity (20.5%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Petrofac's financial position?


Financial Position Analysis

Short Term Liabilities: PFC's short term assets ($4.8B) exceed its short term liabilities ($3.9B).

Long Term Liabilities: PFC's short term assets ($4.8B) exceed its long term liabilities ($1.3B).


Debt to Equity History and Analysis

Debt Level: PFC's debt to equity ratio (87.3%) is considered high.

Reducing Debt: PFC's debt to equity ratio has increased from 63.5% to 87.3% over the past 5 years.

Debt Coverage: PFC's debt is well covered by operating cash flow (89%).

Interest Coverage: PFC's interest payments on its debt are well covered by EBIT (7.5x coverage).


Balance Sheet

Inventory Level: PFC has a low level of unsold assets or inventory.

Debt Coverage by Assets: PFC's debt is covered by short term assets (assets are 5.2x debt).


Next Steps

Dividend

What is Petrofac's current dividend yield, its reliability and sustainability?

8.45%

Current Dividend Yield


Dividend Yield vs Market

company8.5%marketbottom25%1.9%markettop25%5.1%industryaverage6.5%forecastin3Years8.7%

Current dividend yield vs market & industry

Notable Dividend: PFC's dividend (7.59%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: PFC's dividend (7.59%) is in the top 25% of dividend payers in the UK market (4.95%)


Stability and Growth of Payments

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

Growing Dividend: PFC's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (58.2%), PFC's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PFC's dividends in 3 years are forecast to be covered by earnings (55% payout ratio).


Next Steps

Management

What is the CEO of Petrofac's salary, the management and board of directors tenure and is there insider trading?

3.3yrs

Average management tenure


CEO

Ayman Asfari (61yo)

18yrs

Tenure

US$2,250,000

Compensation

Mr. Ayman Asfari has been the Group Chief Executive of Petrofac Limited since January 2002. Mr. Asfari joined Petrofac in 1991 to establish Petrofac International. He Works with the Board to set the strate ...


CEO Compensation Analysis

Compensation vs Market: Ayman's total compensation ($USD2.25M) is about average for companies of similar size in the UK market ($USD1.85M).

Compensation vs Earnings: Ayman's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.3yrs

Average Tenure

54yo

Average Age

Experienced Management: PFC's management team is considered experienced (3.3 years average tenure).


Board Age and Tenure

2.0yrs

Average Tenure

61yo

Average Age

Experienced Board: PFC's board of directors are not considered experienced ( 2 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

BuyUK£4,99903 Oct 19
David Davies
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,271
Max PriceUK£3.93
BuyUK£4,99903 Oct 19
Andrea Abt
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares1,271
Max PriceUK£3.93
BuyUK£4,99903 Oct 19
Matthias Bichsel
EntityIndividual
Role
Lead Director
Senior Independent Director
Shares1,271
Max PriceUK£3.93
BuyUK£4,99903 Oct 19
Sara Akbar
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares1,271
Max PriceUK£3.93
BuyUK£4,99903 Oct 19
George Pierson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,271
Max PriceUK£3.93
BuyUK£19,99903 Oct 19
René Médori
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares5,085
Max PriceUK£3.93
BuyUK£4,99903 Oct 19
Francesca Di Carlo
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares1,271
Max PriceUK£3.93
BuyUK£4,99802 Jul 19
George Pierson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,141
Max PriceUK£4.38
BuyUK£4,99802 Jul 19
David Davies
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,141
Max PriceUK£4.38
BuyUK£3,24102 Jul 19
Francesca Di Carlo
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares740
Max PriceUK£4.38
BuyUK£19,99902 Jul 19
René Médori
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares4,566
Max PriceUK£4.38
BuyUK£4,99802 Jul 19
Andrea Abt
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares1,141
Max PriceUK£4.38
BuyUK£4,99802 Jul 19
Sara Akbar
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares1,141
Max PriceUK£4.38
BuyUK£4,99802 Jul 19
Matthias Bichsel
EntityIndividual
Role
Lead Director
Senior Independent Director
Shares1,141
Max PriceUK£4.38
BuyUK£12,41030 May 19
Alastair Cochran
EntityIndividual
Role
Member of the Board of Directors
CFO & Executive Director
Shares3,029
Max PriceUK£4.10
BuyUK£19,99702 Apr 19
René Médori
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares3,993
Max PriceUK£5.01
BuyUK£4,99802 Apr 19
David Davies
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares998
Max PriceUK£5.01
BuyUK£114,72302 Apr 19
Alastair Cochran
EntityIndividual
Role
Member of the Board of Directors
CFO & Executive Director
Shares23,242
Max PriceUK£4.94
BuyUK£4,99802 Apr 19
Andrea Abt
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares998
Max PriceUK£5.01
BuyUK£4,99802 Apr 19
Matthias Bichsel
EntityIndividual
Role
Lead Director
Senior Independent Director
Shares998
Max PriceUK£5.01
BuyUK£4,99802 Apr 19
Sara Akbar
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares998
Max PriceUK£5.01
BuyUK£4,99802 Apr 19
George Pierson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares998
Max PriceUK£5.01
BuyUK£496,53926 Mar 19
Ayman Asfari
EntityIndividual
Role
Chief Executive Officer
Group Chief Executive & Executive Director
Shares105,750
Max PriceUK£4.70

Ownership Breakdown

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


Management Team

  • Ayman Asfari (61yo)

    Group Chief Executive & Executive Director

    • Tenure: 18yrs
    • Compensation: US$2.25m
  • Paolo Bigi

    Regional Managing Director of Engineering & Construction

    • Tenure: 4yrs
  • Jonathan Low

    Head of Investor Relations

    • Matt Barton

      Group General Counsel

      • Tenure: 2yrs
    • Craig Muir

      Chief Commercial Officer

      • Tenure: 7.9yrs
    • Alison Flynn

      Group Head of Communications

      • Des Thurlby (54yo)

        Group Director of Human Resources

        • Alastair Cochran (49yo)

          CFO & Executive Director

          • Tenure: 3.3yrs
          • Compensation: US$1.53m
        • Allan Cockriel

          Chief Information Officer

          • Tenure: 1.8yrs
        • Tarek Massoud

          Chief Compliance Officer

          • Tenure: 1.1yrs

        Board Members

        • Ayman Asfari (61yo)

          Group Chief Executive & Executive Director

          • Tenure: 18yrs
          • Compensation: US$2.25m
        • Francesca Di Carlo

          Non-Executive Director

          • Tenure: 0.7yrs
        • René Médori (62yo)

          Non-Executive Chairman

          • Tenure: 1.7yrs
          • Compensation: US$313.00k
        • George Pierson (57yo)

          Independent Non-Executive Director

          • Tenure: 3.7yrs
          • Compensation: US$120.00k
        • Sara Akbar

          Non-Executive Director

          • Tenure: 2yrs
          • Compensation: US$100.00k
        • Matthias Bichsel (65yo)

          Senior Independent Director

          • Tenure: 1.7yrs
          • Compensation: US$132.00k
        • Andrea Abt (59yo)

          Non-Executive Director

          • Tenure: 3.7yrs
          • Compensation: US$100.00k
        • Alastair Cochran (49yo)

          CFO & Executive Director

          • Tenure: 3.3yrs
          • Compensation: US$1.53m
        • David Davies (64yo)

          Independent Non-Executive Director

          • Tenure: 1.7yrs
          • Compensation: US$73.00k

        Company Information

        Petrofac Limited's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Petrofac Limited
        • Ticker: PFC
        • Exchange: LSE
        • Founded: 1981
        • Industry: Oil and Gas Equipment and Services
        • Sector: Energy
        • Market Cap: UK£1.160b
        • Shares outstanding: 336.85m
        • Website: https://www.petrofac.com

        Number of Employees


        Location

        • Petrofac Limited
        • 44 Esplanade
        • St Helier
        • JE4 9WG
        • Jersey

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        PFCLSE (London Stock Exchange)YesOrdinary SharesGBGBPOct 2005
        P2FDB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2005
        POFC.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 2005
        PFCLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPOct 2005
        PFC NBMV (Bolsa Mexicana de Valores)YesOrdinary SharesMXMXNOct 2005
        POFC.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDMar 2011

        Biography

        Petrofac Limited, an oilfield service company, provides facilities solutions to the oil and gas production and processing industry worldwide. The company operates through three segments: Engineering & Construction; Engineering & Production Services; and Integrated Energy Services. The Engineering & Construction segment provides onshore and offshore engineering, procurement, construction, installation, and commissioning services. The Engineering & Production Services segment offers concept, feasibility, and front-end engineering and full project delivery, as well as a range of operations, maintenance, and engineering services for onshore and offshore projects. The Integrated Energy Services segment provides an integrated service for clients under flexible commercial models that are aligned with their requirements in projects, including upstream developments, related energy infrastructure projects, and investments. Petrofac Limited was founded in 1981 and is headquartered in St Helier, Jersey. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/27 21:00
        End of Day Share Price2020/01/27 00:00
        Earnings2019/06/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.