Seacor Holdings, Inc. (CKH), Era Group Inc (ERA): Looking Closer at This Helicopter Operator Spin-off

In 2011 pro forma financial statement, Era Group Inc (NYSE:ERA) generated $258 million in revenue and nearly $12.8 million in profits. Era seemed to have quite reasonable leverage. As of September 2012, it had $415.9 million in total stockholders’ equity, $10.85 million in cash, and $278 million in long-term debt. Interestingly, it had nearly $200 million in deferred income taxes, which were effectively considered the interest-free loan from the government.

Peer Comparison

Era is trading at $20.32 per share, with a total market cap of nearly $500 million. The market is valuing Era at 10.78 times EV/EBITDA. Compared to its peers PHI and Bristow Group Inc (NYSE:BRS), Era seems to have a bit more expensive valuation than the other two. Bristow is the largest company among the three, with $2.1 billion in total market cap. At the trading price of $58.30 per share, Bristow is valued at 10.16 times EV/EBITDA. PHI, with the total market cap of $470 million, has the cheapest valuation at 8.26 times EV/EBITDA. Among the three, Bristow seems to be the most profitable company, with the highest operating margin at 15.42%, while the operating margins of PHI and Era were 9.7% and 9.92%, respectively. Whereas both PHI and Era don’t pay any dividends to shareholders, Bristow pays to its shareholders 1.4% dividend yield.

Foolish Bottom Line

Looking forward, Seacor seems to be more focused after divesting its energy trading business and spinning off Era. As both are involved in the capital-intensive businesses, I do not consider either Seacor or Era to be good long-term investments. Among those stocks mentioned above, Bristow seems to be the best pick at the moment as it had the highest operating margin and a reasonable valuation.

The article Looking Closer at This Helicopter Operator Spin-off originally appeared on and is written by Anh Hoang.

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