Polypipe Group Plc – Value Analysis (LONDON:PLP) : January 1, 2018

Capitalcube gives Polypipe Group Plc a score of 72.

Our analysis is based on comparing Polypipe Group Plc with the following peers – Titon Holdings Plc, Alumasc Group plc, Volution Group plc and Aliaxis SA (TON-GB, ALU-GB, FAN-GB and 1153318-BE).

Investment Outlook

Polypipe Group Plc has a fundamental score of 72 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It’s current Price/Book of 2.61 is about median in its peer group.
  • PLP-GB‘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.
  • PLP-GB‘s relatively high profit margins are burdened by relative asset inefficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • PLP-GB‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • PLP-GB‘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 is likely overinvesting in a business with only median returns.
  • PLP-GB has additional debt capacity.

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Leverage & Liquidity

PLP-GB has additional debt capacity.

  • With debt at a reasonable 22.11% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 17.21%), and a well-cushioned interest coverage level of 9.27x, PLP-GB has the capacity to borrow some more.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include .

PLP-GB has maintained its relatively high liquidity profile from the prior year-end.

  • PLP-GB‘s interest coverage is its highest over the last four years and compares to a low of 2.37x in 2012.
  • While its interest coverage increased to 9.27x from 8.17x (in 2015), its peer median decreased during this period to 14.56x from 16.32x.
  • Interest coverage rose 2.86 points relative to peers.
  • PLP-GB‘s debt-EV has declined 2.15 percentage points from last year’s high and is now close to its four-year average debt-EV.
  • While its debt-EV decreased to 22.11% from 24.27% (in 2015), its peer median increased during this period to 17.21% from 14.93%.
  • Relative to peers, debt-EV fell 4.43 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Titon Holdings Plc N/A 3.13 0 999
Alumasc Group plc 4.86 1.73 67.21 259.72
Volution Group plc 12.31 1.54 19.84 62.71
Aliaxis SA 33.47 2.14 7.78 32.91
Polypipe Group PLC 22.11 1.42 9.27 34.84
Peer Median 17.21 1.73 14.56 62.71
Best In Class 4.86 3.13 67.21 999

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Company Profile

Polypipe Group Plc is a holding company which engages in the manufacture and trade of plastic pipe systems. The company was founded in 1980 and is headquartered in Doncaster, the United Kingdom.

Disclaimer

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