Bristow Group Inc (BRS): Is This The High-Flying Stock You Need to Watch?

Era Group makes up for this lack of international exposure through its contract-leasing business, which makes up one-fifth of its revenue. The contract leasing business represents a low cost entry strategy for Era Group to enter new developing markets where it does not have the necessary infrastructure to run the entire operations on its own. Despite this, I still favor Bristow for its full exposure to diversified international markets.

Air Methods Corp (NASDAQ:AIRM) is differentiated from Era Group and Bristow given its exclusive focus on air medical transportation services, being the largest player in the U.S. While it has a mix of both fixed and variable revenue similar to Bristow, Air Methods has a higher proportion of non-contract variable revenue. For the trailing-12 months, Air Methods generated more than 70% of its sales from its non-contractual patient- transport business where it assumes ownership of the program, with the remaining 30% of revenue generated from long-term vendor contracts with hospitals providing on medical services.

I am not considering Air Methods, given its large percentage of non-contractual revenue. This was validated by its first-quarter fiscal 2013 results, where revenue fell 7% largely because of severe weather affecting patient transports. In addition, Air Methods has the weakest balance sheet of the three with a gearing of 224%.

Conclusion

Bristow Group Inc (NYSE:BRS) is undervalued both on a relative and absolute basis. On a trailing-12 months P/E valuation basis, it is the most undervalued among its peers with a P/E of 18. On an absolute basis, a PEG of 0.7 suggests that Bristow is cheap relative to its growth prospects. I prefer Bristow over its peers given its geographical diversity and high proportion of fixed revenue. At current valuations, Bristow is an attractive investment candidate.

The article Is This The High-Flying Stock You Need to Watch? originally appeared on Fool.com and is written by Mark Lin.

Mark Lin has no position in any stocks mentioned. The Motley Fool recommends Air Methods. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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