Petrofac dips back into its consolidation zone on full-year results (PFC)

By Patricia Miller

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Back in December I took a good look at Petrofac (LSE:PFC) and concluded it was undervalued; albeit with an attached risk due to an SFO investigation overshadowing the company. The share price did subsequently recover from £4.60 to £5.85. January saw a strong decline in the price, once again nearly slumping to £4.00 at the beginning of February. The price has increased by almost 20% since to £4.78; that is until today.

The company has announced its full-year results, and the market has reacted negatively,  5% of its value as I write despite opening up higher this morning. Underlying performance has improved with a 7.2% increase in profits to $343m but exceptional items, which included $350 in non-cash items, pulled the overall figures into the red by $29m. Net debt remains at $600k.

The share price chart shows evidence of significant consolidation around the £4.15-£4.40 region. Movement in the price so far today does suggest the market is very undecided, although this stock has been a trading favourite for its large swings for some time.

This dip today may offer a good re-entry level for those sitting on the fence waiting for the results. Barring no major bad news regarding the SFO investigation, downside at the moment appears to be towards the £4.00 area. A potential return to recent highs or higher seems a reasonable target for the more risk-averse investor.

Author: Stuart Langelaan

Disclosure: The author of this piece owns shares in the company written about above

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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