Amec Foster Wheeler (LSE: AMFW) has faced selling pressure due to the company’s exposure to the oil and gas industry. And with over $200bn worth of oil & gas sector projects being written off since the beginning of the year, Amec is facing a certain amount of pressure.
However, the company has a diversified client base and continues to win contracts. A solid order backlog is also helping, and group earnings per share are only expected to fall 11% this year before rebounding by 8% during 2016.
As Amec continues to win customers, the company certainly doesn’t deserve its low valuation of 10.9x forward earnings. The company also supports a dividend yield of 5.2%, and the payout is covered 1.7x by earnings per share.
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Winning orders
Cape (LSE: CIU) is another engineer that’s suffering from the turbulence within the oil & gas market. Over the past twelve months, the company’s shares have fallen by 17.5% due to concerns about growth.
Nevertheless, just like Amec, Cape continues to win orders. Indeed, back in May the company announced that it had signed contracts in the UK with oil giants ExxonMobil and BP, which “materially” increased its order book.
After recent declines, the company is trading at a bargain-basement forward P/E of only 8.5. Cape supports a dividend yield of 6%. The payout is covered twice by earnings per share.
Changing business model
Connect (LSE: CNCT) is a misunderstood and undervalued dividend champion. At present, the company’s shares support a dividend yield of 6%, and the payout is covered twice by earnings per share. Further, Connect is currently trading at a forward P/E of 8.1 as the market struggles to understand the company’s changing business model.
Connect is predominantly a UK-focused newspaper and magazine distribution business — considered by many to be a dying industry. But the company is rapidly expanding non-print related revenue and profits. 50% of sales will be non-print by 2016, which should push the market to re-rating Connect’s shares.
Total return
Carillion (LSE: CLLN) is one of those ‘boring’ slow-and-steady construction companies that many investors can’t be bothered to research. The company’s shares haven’t done much over the past ten years and have underperformed the wider FTSE 250 by 105% over the past ten years.
Still, the company trades at a rock-bottom forward P/E of 10.2 and supports a yield of 5.2%. Moreover, in you include dividends paid to investors, over the past ten years Carillion has returned 6% per annum, around the same as the FTSE 100.
Pulling through
Lastly, RPS (LSE: RPS), which is yet another engineer that’s been shunned by investors following weakness in the oil & gas market. Unfortunately, the consultancy company is suffering from the downturn. , due to RPS’ diverse range of activities, revenue for the period rose 1.7%. Also, the energy consultancy lifted its interim dividend by 15% to 4.66p.
RPS currently trades at a forward P/E of 10.2 and supports a dividend yield of 4.5%.
