Shares in these three companies have all fallen heavily over the last year, but does recent news suggest they may be poised for a comeback?
Hunting
Shares in oil and gas equipment firm Hunting (LSE: HTG) rose sharply this morning after the firm declared a surprise 4 cent per share final dividend, taking the total payout for 2015 to 8 cents (around 5.7p).
It’s a far cry from last year’s 22p payout, but shareholders should take some comfort from today’s results. These show an underlying profit from continuing operations of $9.4m, down from $212.4m in 2014.
Hunting had a strong first half in 2015, as it cleared the backlog of orders from 2014. This helped to generate $118m of free cash flow and to reduce net debt to $110.5m from $131m at the end of 2014.
However, the second half of 2015 was fairly grim, as the firm’s pipeline of new business dried up. This morning, Denis Proctor, Hunting’s chief executive, said “We are in a wilderness without a single path to guide us”.
I suspect 2016 will be worse than 2015 for Hunting, but will it be the bottom? It’s too soon to say, in my view.
BP
BP (LSE: BP) delivered a grim set of 2015 results, but there was one highlight. The dividend was held, at $0.40 per share. This is about 28.5p and gives a yield of about 8%, at the current share price.
Although BP may still cut its dividend, I believe there’s a good chance that the payout will be maintained. BP’s debt levels remain low. Big cuts to spending and further asset sales mean that cash generation remains fairly strong.
Assuming that oil prices start to recover within the next 18 months or so, I don’t see any reason why BP can’t maintain the dividend. The firm has certainly convinced the City that the payout will remain unchanged. The latest consensus forecasts for 2017 show a flat payout of $0.40 per share.
In my view, BP shares could easily rise by about 20% when the oil market starts to recover. Add this to an 8% yield and I think the stock looks a decent buy. That’s why I recently added BP to my own portfolio.
Amec Foster Wheeler
The risks seem higher at Amec Foster Wheeler (LSE: AMFW), but the firm does seem to be making progress in the wake of chief executive Samir Brikho’s January departure.
Amec shares rose by about 7% on Wednesday, after the firm said it had agreed a competitive new finance facility with its lenders.
Amec shares do look relatively cheap at the moment, at least based on analysts’ forecasts. The stock boasts a 2015 forecast P/E of 7.1, rising to a forecast P/E of 8.3 for 2016.
However, the fact that 2016 earnings are expected to fall is a potential warning flag. Amec’s net debt is also quite high, at £957m. This is the result of the Foster Wheeler acquisition, which completed at the start of 2015.
Amec was also forced to issue a profit warning and cut its dividend by 50% in November. Analysts are forecasting a further cut of 25% for 2016, alongside a 14% drop in profits. It could still be too soon to buy, in my view.
