Companies: SWG   

While shares in engineering consultancy Scott Wilson, backed by Growth Company Investor at 312.6p last year, have fallen back amid market tumult. Based on fundamentals, we consider them a long-term hold.

Floated on the Main Board in 2006, the company provides an array of professional services into sectors such as transport, property and natural resources. Chairman Geoff French recently reassured investors with a positive update on trading since the half-year, at which stage the UK-headquartered company, whose operations span Asia, the Middle East, Africa and Eastern Europe, reported a bulging record order book of £280m.

Market conditions remained favourable throughout the third quarter in the group’s main markets. All divisions are capitalising on these positive market conditions and strong demand seen both at home and overseas has translated into a ‘good flow of new contract awards’ for the fast-growing Scott Wilson, which has doubled in size over the past few years.

As a result, the company is confident of hitting its numbers for the year to April. The market expects pre-tax profits of £23.4m and 19.8p of earnings, ahead of £24.8m and 21.7p for 2009, placing Scott Wilson on undemanding prospective earnings multiples of 11.8 and 10.8.

Moreover, with net borrowings low, Scott Wilson has the financial headroom to boost organic growth through key in-fill acquisitions and continues to run the rule over potential deals. Scott Wilson still has that top-quality look to it, so sit tight.

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