APN Outdoor Group Ltd. – Value Analysis (ASX:APO) : October 5, 2017

Capitalcube gives APN Outdoor Group Ltd. a score of 81.

Our analysis is based on comparing APN Outdoor Group Ltd. with the following peers – Snakk Media Ltd., Enero Group Limited, Invigor Group Ltd. and WPP AUNZ Limited (SNK-NZ, EGG-AU, IVO-AU and WPP-AU).

Investment Outlook

APN Outdoor Group Ltd. has a fundamental score of 81 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Taking peer performance into consideration, relative performance over the last month and last year is around the peer median.
  • It currently trades at a Price/Book ratio of (2.68).
  • APO-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.
  • APO-AU has relatively high profit margins while operating with median asset turns.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • APO-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 gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • APO-AU‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • APO-AU has the financial and operating capacity to borrow quickly.

Access our research and ratings on APN Outdoor Group Ltd.

Leverage & Liquidity

APO-AU has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 11.92% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 11.92%), and a well-cushioned interest coverage level of 23.22x, APO-AU can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include SNK-NZ.

APO-AU has maintained its Quick & Able profile from the prior year-end.

  • APO-AU‘s interest coverage is its highest over the last four years and compares to a low of 1.05x in 2012.
  • While its interest coverage increased to 23.22x from 21.65x (in 2015), its peer median decreased during this period to 15.85x from 21.65x.
  • Interest coverage rose 7.37 points relative to peers.
  • APO-AU‘s debt-EV has increased 5.47 percentage points from last year’s low but is still below its four-year average debt-EV of 44.37.
  • The increase in its debt-EV to 11.92% from 6.46% (in 2015) was also accompanied by an increase in its peer median during this period to 11.92% from 6.46%.

Access the detailed analysis for APN Outdoor Group Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Snakk Media Ltd. 0 1.23 No interest exp 999
Enero Group Limited 5.76 1.59 15.85 498.14
Invigor Group Ltd. 60.63 0.22 -9.85 -93.2
WPP AUNZ Limited 32.56 1.04 3.61 33.21
APN Outdoor Group Ltd. 11.92 0.51 23.22 71.18
Peer Median 11.92 1.04 15.85 71.18
Best In Class 5.76 1.59 No interest exp 999

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Company Profile

APN Outdoor Group Ltd. provides outdoor advertising solutions. It supplies out-of-home media and advertising services at sites in Australia and New Zealand. The company offers advertising space through digital billboards, billboards, transit, rail and airports. APN Outdoor Group was founded in 2004 and is headquartered in Pyrmont, Australia.

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