Woodside Petroleum Limited (ASX: WPL) has delivered strong returns to investors over the last six months, with shares in the oil and gas company rising by an impressive 9%. This is considerably ahead of the ASX's gain over the same time period of 3.5% and shows that Woodside Petroleum is continuing to bounce back after a challenging 2011 and 2012. Does this mean, though, that shares in the company are now fully valued? Or is there still more upside on offer? Here are three reasons why Woodside could have a bright future.
Valuation
Despite its recent share price rise, Woodside continues to offer good value for money at current price levels. Certainly, it now trades on a higher valuation than six months ago but remains relatively good value when compared to the ASX. For example, Woodside trades on a P/E of just 13.6, which is 16% below the ASX's P/E of 16.2. This highlights that there is still considerable scope for an upward rating adjustment to Woodside, which is clearly great news for shareholders since it could mean further share price rises.
Growth potential
However, Woodside isn't just cheap. It has strong growth prospects, too. For example, the company is expected to increase its bottom line by 19.3% over the next two years alone. This figure is very impressive and compares favourably both to the sector and to the wider index. Indeed, when such strong growth prospects are combined with a relatively low P/E, it means that Woodside currently trades on a price to earnings growth (PEG) ratio of just 0.7. This is very low and highlights that Woodside offers top-notch growth at a very reasonable price.
Income prospects
As well as good value and impressive growth potential, Woodside also offers investors a fat, fully franked yield. Shares in the company currently have a dividend yield of 5.9%, which is well ahead of the ASX's 4.5% yield. It also looks even more attractive when you consider that Woodside's bottom line is due to experience strong growth over the next couple of years, which could have a positive impact on dividend per share growth.
Looking Ahead
So, while Woodside's share price has had a strong six months, the company still seems to offer a potent mix of value, growth potential and income prospects that should mean it has a very bright future ahead of it.
