Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Should You Buy Intertek Group plc (ITRK)?

Page 1 of 2

LONDON — Support services play Intertek Group plc (LON:ITRK) has continued to print spectacular earnings growth in recent years, as its diverse range of end markets and market-leading expertise has helped to build enviable resilience.

Intertek Group plc (LON:ITRK)

Although I believe Intertek Group plc (LON:ITRK) has what it takes to remain on a relentless growth path, I believe a steadily rising share price means much of this projected expansion is already factored in at current levels, leaving little upside potential.

2012 marks another year of stellar growth
Intertek’s full-year results released last week showed revenues leap an impressive 17% in 2012 to £2.1 billion, which in turn pushed pre-tax profits 19% higher to £308 million.

The firm — whose network of 1,000 laboratories straddles more than 100 countries across the globe — tests, inspects and certifies a wide range of products, including aeroplane parts, training shoes and children’s toys.

This broad spectrum, across both traditional and emerging geographies, has helped the firm shrug off weakness in individual markets. The group’s services also span a multitude of exciting industries with considerable structural growth prospects that I believe will underpin growth over the longer term.

Great growth prospects come at a price
Earnings per share growth of 13%, to 151p, is expected this year, according to City analysts. Growth is then projected to tick up slightly to 14% in 2014, to 172p per share.

Intertek Group plc (LON:ITRK) has bucked the weakness in the wider economy to deliver excellent, double-digit earnings growth for a number of years now. And although I am convinced the company should continue to deliver yet more heady growth, at present price levels this expansion looks to be factored into the price.

The testing specialist currently trades on a forward P/E ratio of 22.8, and this is forecast to remain at an elevated 20.1 next year. And Intertek’s high premium is borne out through its price/earnings to growth (PEG) multiple, which is estimated to remain well above the value-for-money watermark of 1 over the medium term — readings of 1.7 and 1.5 are projected for 2013 and 2014 respectively.

Page 1 of 2
Loading Comments...