The Austal Limited (ASX: ASB) share price closed 4.45% lower yesterday despite the Aussie shipbuilder delivering a positive operational update.
Austal updated the market on its 11th Expeditionary Fast Transport Vessel (EPF11) and the results from U.S. Navy Acceptance Trials.
What are the U.S. Navy Acceptance Trials?
The U.S. Navy comprehensively test the vessels prior to bringing them on-board as part of the current fleet.
According to Austal, the latest rounds of tests combined formal Builder's Trials with Acceptance Trials for the first time on this class of vessel, which were conducted in the Gulf of Mexico.
How did the Austal vessel perform in testing?
Austal CEO said that EPF11, or the future USNS Puerto Rico, successfully completed and passed all tests before returning from sea earlier than scheduled in a strong result for the Aussie shipbuilder.
The ship is scheduled for delivery to the U.S. Navy before year-end, with 3 ships in the portfolio still to be built and delivered.
Why did the Austal share price drop?
Despite the positive update, the Austal share price still closed 4.45% lower on Monday afternoon at $3.65 per share.
On a day where the S&P/ASX200 Index (INDEXASX: XJO) fell 1.27% lower to 6,440.1 points, it appears as if Austal got caught up in the negative sentiment.
While positive, the update on EPF11 wasn't a value-add for shareholders, meaning the share price slid lower throughout the day and into the market close.
Foolish takeaway
With a market cap of $1.3 billion, Austal is no small fish on the market and has seen its share price nearly double since its $1.91 valuation at the start of January.
However, the Aussie shipbuilder's shares do trade on an earnings multiple of 35x and offers its investors just a 1.64% dividend yield, meaning there could be better value Industrials sector companies on the market.
While in a different industry within Industrials, I think the Seven Group Holdings Ltd (ASX: SVW) could be more attractive at 25x earnings with a 2.65% p.a. dividend yield.
Austal is expected to release its FY2019 results in a pre-market open announcement on 30 August 2019.
