John Wood Group PLC

John Wood Group is an FTSE 250 index listed world’s leading Company in consulting, projects and operations solutions operating across the energy and the built environment with 40,000 professionals across 60 countries.

On March 8, 2022, the Company will release its full-year FY21 results.

Investment Rationale – Watch at GBX 242.14

• Decrease in Financials Numbers: The Company’s revenue has gone down by 14% to $6.4 billion and EBITDA down by 9% to $550 to 560 million during FY21.
• Increase in Net Debt: Company’s Net Debt as on 31 December 2021 is $1.4 billion as compared to $1.01 billion as on 31 December 2020, representing a net increase of $400 million due to exceptional cash cost and lower EPC activity from market conditions.
• Low Current Ratio: The company has a current ratio of 0.75x as compared to the industry median of 1.2x during H1 FY21.
• Unfavourable Technical Indicators: From a technical standpoint, the 14-days RSI of the stock is ~74.51, which reflects a bearish price momentum.

One Year Share Price Chart

(Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the low margins, high debt, and unfavourable technical indicators, we have given a “Watch” recommendation on John Wood Group PLC at the current market price of GBX 242.14 (as of 14 January 2022 at 9:09 AM GMT). However, for any profit booking scenario, buy and holding levels should be looked at as per the risk appetite of investors.

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