WorleyParsons share price on watch following after-market ASX announcement

The WorleyParsons Limited (ASX: WOR) share price could climb higher this morning after the engineering group announced it has been awarded a significant project management contract (PMC) in the United Arab Emirates (UAE).

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The WorleyParsons Limited (ASX: WOR) share price could climb higher this morning after the engineering group was awarded a significant project management contract (PMC) in the United Arab Emirates (UAE).

What's involved in the contract?

Borouge, a joint venture (JV) between Abu Dhabi National Oil Company (ADNOC) and Borealis AS, awarded WorleyParsons the PMC for its Ruwais petrochemicals complex in the UAE.

Under the contract, WorleyParsons will provide PMC services to the fourth phase of the petrochemicals complex which will include the world's largest mixed feed cracker with an estimated 1.8 million tonnes per annum of ethylene output. The complex will have a production capacity of 3.3 million tonnes per annum of olefins and aromatics using a variety of feedstocks from ADNOC's refining and gas processing facilities.

How has the WorleyParsons share price performed this year?

This contract is the latest advancement for the engineering, procurement and construction (EPC) provider which has continued to expand in the last 6-12 months and has seen its share price climb 27% higher in 2019 alone.

With a market capitalisation of $6.7 billion, WorleyParsons is Australia's largest EPC contractor and recently announced a half-year underlying net profit after tax (NPAT) of $98.4 million, up 25.8% on the prior corresponding period (pcp).

The company saw aggregated revenue rise 11.1% on pcp to $2.57 billion, acquired Jacobs' Energy, Chemicals & Resources (ECR) division and de-risked its balance sheet in a busy and successful 6-month period.

Is WorleyParsons in the buy zone?

While the WorleyParsons share price has had a strong start to the year, the stock plummeted 41.4% in Q4 2018 alone to close out the year at $11.42 per share. It was a similar story for fellow EPC rival Emeco Holdings Limited (ASX: EHL) which saw its share price plummet 45.3% over the same 3 month period while the Seven Group Holdings Limited (ASX: SVW) share price finished the quarter 31% lower.

WorleyParsons' 1.59% dividend yield is lower than its rivals but the stock is trading at a P/E ratio of 31.5x compared to the comparably-sized Seven Group (21x), while Emeco, with a market cap of $707.8 million, trades on a P/E multiple of 47x.

While the Jacobs acquisition and balance sheet de-risking could point to further organic and inorganic growth for the group, I'd prefer to look at adding one of these top growth shares to my portfolio given the share price volatility that we've seen in the last 6 months in the EPC space.

Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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