McDermott's a Pretty Good Value Play

For investors seeking to beat the market, value plays are good places to look. McDermott (MDR), an engineering & construction company, is showing some decent value characteristics when compared to traditional E&C companies on several important measures. In addition, will the key drivers for the energy industry served by McDermott likely to remain? Further, what barriers to entry does McDermott have to protect their market position?

Performance Comparison

A quick look at a couple of measures tells an interesting story. As shown in the chart below, McDermott sports a lower PE ratio compared to many of its peers. I used the current stock price and 2007 earnings to for each firm to help make the results comparable. The lower PE ratio could mean McDermott is slightly undervalued compared to its peers or the market has lower growth expectations.