Is this worth a punt? All opinions welcome.

Fundamentals

Bit of Broker info here...

Broker snap: Intertek set to grow 5-10% organically

10 Mar, 2009 11:59


Safety services specialist Intertek saw revenues tip over the 1bn mark for 2008, helping profits rise 31% in the year, and Citigroup reckons there is more growth to come.

"Intertek offers strong structural growth at high return on capital employed and with sub- average cyclicality, we believe," Citi said.

The bank believes Intertek is set for organic growth of 5-10% this year with maintained or even improved margins.

Citi has raised its price target from 950p to 1000p which values Intertek at 10 times projected 2009 earnings.

Though this is a 25% premium to the sector, Citi believes the higher rating is justified "by its higher structural growth and returns, relatively defensive growth and a compelling bolt-on acquisition story."

Citi has a "buy" recommendation on the shares.

HSBC has an overweight for Intertek, raising target to 11.90 from 10.20

Lovely chance to get in this morning on this short term pullback.

Trades on a forward P/E of just 12 going into 2010 which is way too cheap for a niche player like this.

Intertek Group PLC

FORECASTS
2009 2010

Date Rec Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p
)
Exane BNP Paribas
17-03-09 HOLD 162.00 71.84 25.42 168.00 73.33 25.94

Seymour Pierce
09-03-09 BUY

Altium Securities
09-03-09 HOLD 165.00 72.90 22.40 182.00 79.40 23.50

ABN AMRO
10-02-09 BUY 152.12 65.37 23.00

Eden Group
04-02-09 BUY

2009 2010
Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

Consensus 163.48 72.36 23.93 174.92 76.33 24.73

1 Month Change 13.36 7.44 0.46 31.92 12.98 1.08
3 Month Change 17.92 7.68 0.76 31.92 12.98 1.08


GROWTH
2008 (A) 2009 (E) 2010 (E)

Norm. EPS 35.52% 14.78% 5.49%
DPS 20.62% 23.99% 3.34%

INVESTMENT RATIOS

2008 (A) 2009 (E) 2010 (E)

EBITDA 194.20m 221.01m 237.00m

EBIT 145.10m 189.00m 191.00m

Dividend Yield 2.06% 2.55% 2.64%

Dividend Cover 3.27x 3.02x 3.09x

PER 14.89x 12.97x 12.30x

PEG 0.42f 0.88f 2.24f

Net Asset Value PS -35.23p 196.66p 250.00p

Intertek is an inspection, testing and certification services company organised into five divisions, each serving a particular industry. Roughly, 30% of revenue comes from the Commodities sector, 27% from Industry and Insurance , 18% from Consumer Goods, 17% from Commercial and Electrical, and 8% from Chemicals and Pharmaceutical. It's a cash-generative business that's seeing strong growth, particularly in energy and commodity end-markets. Judging by past performance, that growth in revenues is likely to result in continuing earnings growth, too.