The Investment Column: WS Atkins

WS ATKINS, once a property services company, has transformed itself into a diversified and hi-tech services company that has benefited from outsourcing by clients such as Railtrack. Since 1995 sales have grown from pounds 196m to pounds 426m, while earnings per share have doubled to 23p.

However, the shares have dropped sharply from last year's peak of 669.5p. Atkins sounded a cautious note at its interim results in November following the autumn's economic wobbles. A shock warning in March from one of its peers, AEA Technology, dented sentiment further.

Yesterday's full-year figures received a lukewarm reception as operating margins slipped from 5.8 to 5.6 per cent. The shares tipped up 5p to 530p. Analysts expect pre-tax profits of about pounds 38m.

The shares' rating of 21 times forecast earnings puts Atkins at a discount to its peers Serco and Capita. That looks unfair - Atkins is well placed to expand by acquisition and is looking for targets. It is exposed to recovery in Asia, and at home Railtrack is obliged to up its spending. The shares are a buy.