As an engineering services company, the ever present challenge is to continually win more work. Work to replace completed projects, and more work to underpin growth.

However, the demand from clients is rather cyclical, and can dry up extrenely quickly (just look at what happened to the mining services companies when commodity prices collapsed a few years ago). Even existing projects can end sooner than expected, or can easily be renegotiated when clients are having cash flow challenges.

When work does dry up, the business is left with lots of idle and expensive consultants that they need to pay, so there can be pretty significant operating leverage -- which means seemingly modest revenue declines can translate into substantial drops in profit.

Of course, that works in both directions. The workforce can take on a lot of new projects before additional resources are required.

So the ideal time to buy a company like this is when you are (a) confident of lots of work coming in, and (b) shares are trading at an attractive multiple of expected earnings.

You also need to be confident that the business' key assets -- its people -- are likely to stick around, and not leave and take valuable clients with them.

So, i'm not against this business, but i'd be cautious not to value them on 'peak earnings' and would want to have a good degree of confidence that workloads will remain decent for a good period of time.