Stock Analysis & Valuation John Wood Group PLC (WG.L)

• Previous Close: £26.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	58.40	125
Intrinsic value (DCF)	59.41	128
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

John Wood Group PLC (LSE: WG.L) is a leading global consulting and engineering firm specializing in energy and the built environment. Headquartered in Aberdeen, UK, the company operates across four key segments: Projects, Operations, Consulting, and Investment. Wood Group provides critical engineering solutions, including decarbonization, renewable energy, and low-carbon initiatives, serving industries such as oil & gas, infrastructure, mining, and power. With a strong focus on sustainability, the company offers environmental remediation, clean energy solutions, and automation services, positioning itself as a key player in the energy transition. Wood Group's expertise in subsea systems, marine terminals, and industrial automation further strengthens its market position. Founded in 1961, the company has a global footprint, delivering project management and technical consulting to governments and corporations worldwide.

Investment Summary

John Wood Group presents a mixed investment case. The company operates in the high-growth energy transition and decarbonization space, benefiting from increasing demand for sustainable engineering solutions. However, its FY 2023 financials show a net loss of £110.7 million, raising concerns about profitability. The lack of dividends may deter income-focused investors, but its strong operating cash flow (£48.4 million) and solid cash reserves (£384.6 million) provide some financial stability. With a beta of 0.776, Wood Group is less volatile than the broader market, making it a relatively defensive play in the energy sector. Investors should weigh its exposure to the oil & gas industry against its growing renewable energy portfolio.

Competitive Analysis

John Wood Group competes in the highly fragmented engineering and consulting sector for energy and infrastructure. Its competitive advantage lies in its diversified service offerings, spanning traditional oil & gas engineering and emerging decarbonization technologies. The company's deep expertise in subsea systems and environmental remediation differentiates it from generalist engineering firms. However, its reliance on the oil & gas sector (historically cyclical) poses risks, though its pivot toward renewables and clean energy mitigates some exposure. Wood Group's global footprint allows it to secure large-scale projects, but it faces pricing pressure from lower-cost competitors. Its consulting segment provides high-margin recurring revenue, balancing the lumpier project-based income. The company's ability to integrate sustainability into traditional energy projects gives it an edge in markets transitioning to low-carbon solutions. Still, its high debt load (£1.53 billion) could limit flexibility compared to peers with stronger balance sheets.

Major Competitors

• Ameresco Inc (AMRC): Ameresco specializes in renewable energy and energy efficiency solutions, competing with Wood Group in clean energy consulting. Its strong US government contracts provide stability, but it lacks Wood's global scale in traditional energy projects. Ameresco's focus on smaller-scale energy retrofits contrasts with Wood's large engineering projects.
• WSP Global Inc (WSP.TO): WSP is a broader engineering consultancy with a strong environmental services division. It competes with Wood in infrastructure and energy but has less specialization in oil & gas. WSP's acquisitive growth strategy gives it scale advantages, though Wood retains deeper technical expertise in subsea and marine systems.
• Jacobs Solutions Inc (J): Jacobs is a larger, diversified engineering firm with significant government and space sector work. It overlaps with Wood in environmental and infrastructure consulting but has a stronger US presence. Jacobs' higher-margin professional services contrast with Wood's more capital-intensive project work.
• TECHNIP ENERGIES (TECH.L): Technip Energies is a direct competitor in energy project engineering, particularly LNG and hydrogen. Its stronger balance sheet and focus on mega-projects give it an edge in bidding for large contracts, but Wood's broader consulting services provide more diversified revenue streams.
• Air Liquide SA (AIM.PA): Air Liquide competes in industrial gas and energy transition solutions. While not a direct consulting rival, its hydrogen and carbon capture initiatives overlap with Wood's clean energy segment. Air Liquide's stronger financial position allows for greater R&D investment in low-carbon technologies.