Q: I would appreciate your comments on the recent weakness in WSP’s share price. Could you please outline the main factors behind the sudden drop and whether this appears to be short-term market volatility or something more fundamental?
In particular, is the recent acquisition a significant factor in the decline, and if so, how do you assess the risks and potential long-term benefits from that transaction?
Additionally, at current price levels, would you consider WSP a buy, a hold, or a position to trim for a long-term investor? Any perspective on valuation, outlook, and key risks would be greatly appreciated.
Thank you very much for your insight.
Rick
In particular, is the recent acquisition a significant factor in the decline, and if so, how do you assess the risks and potential long-term benefits from that transaction?
Additionally, at current price levels, would you consider WSP a buy, a hold, or a position to trim for a long-term investor? Any perspective on valuation, outlook, and key risks would be greatly appreciated.
Thank you very much for your insight.
Rick
5i Research Answer:
Please see other comments posted today as well on WSP's decline. We do not see the decline as based on fundamental facts. The recent acquisition was large, and with an equity issue certainly the stock experienced some acquisition pressure. But we would not see the acquisition as bad at all, and WSP has an excellent acquisition record. We discussed the acquisition here.
We would be fine buying at 23x earnings, considering the backlog, growth potential and past excellent record.