Adelaide Brighton Ltd. : Relatively Poor Pick? Maybe.
CapitalCube | Mar 22, 2015 01:43AM ET
Adelaide Brighton Ltd (ASX:ABC) Ltd. relative valuation has changed to OVERVALUED from NEUTRAL.
It has a Fundamental Analysis Score of 78 and a CapitalCube Implied Price of AUD 3.94.
h3 Relative Valuation/h3Adelaide Brighton Ltd.'s price of AUD 4.45 is greater than CapitalCube's implied price of AUD 3.94. At this level, alCube believes that Adelaide Brighton Ltd. is overvalued. Over the last 52 week period, the stock has fluctuated between AUD 3.12 and AUD 4.56.
- Relative outperformance over the last year and the last month suggest a leading position.
- Adelaide Brighton Ltd. currently trades at a higher Price/Book ratio (2.54) than its peer median (1.43).
- ABC-AU‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
- ABC-AU has relatively high profit margins while operating with median asset turns.
- Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
- ABC-AU‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
- The company's relatively high pre-tax margin suggests tight control on operating costs versus peers.
- While ABC-AU‘s revenues in recent years have grown faster than the peer median, the market gives the stock a PE ratio that is around peer median suggesting that the market has some questions about the company's long-term strategy.
- The company's level of capital investment seems appropriate to support the company's growth.
- ABC-AU has the financial and operating capacity to borrow quickly.
Adelaide Brighton Ltd. has a fundamental score of 78 and has a relative valuation of OVERVALUED.
Adelaide Brighton Ltd. appears on the top right hand quadrant of CapitalCube's Value – Price Matrix. We classify this as ‘Safety'. In other words, Adelaide Brighton Ltd. has a relatively high Fundamental Analysis score of 78, while being potentially overvalued and trading higher than its CapitalCube Implied Price of 3.94. There might be some safety in this stock where it's fundamental strength perhaps justifies its relatively higher price.
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The market seems to expect ABC-AU to maintain its relatively high returns.
ABC-AU‘s operating performance is higher than the median of its chosen peers (ROE of 15.71% compared to the peer median ROE of 10.78%) but the market does not seem to expect higher growth relative to peers (PE of 16.70 compared to peer median of 19.67) but simply to maintain its relatively high rates of return.
The company currently trades at a higher Price/Book ratio of 2.54 compared to its peer median of 1.43.
ABC-AU has moved to a relatively high ROE from an Harvesting profile at the prior year-end.
Adelaide Brighton Ltd. is an integrated construction material and lime producing company that is focused on the construction, engineering, infrastructure and resource sectors in Australia. Its activities are the production of clinker, cement and lime products, premixed concrete and aggregates and concrete products. It also imports cementitious materials into Australia and through its efficient import supply chain has access to every mainland capital city market. The company operates its business through two segments: Cement, Lime, Concrete & Aggregates and Concrete Products. Adelaide Brighton was founded in 1882 and is headquartered in Adelaide, Australia.
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