Premier Technical Services Group Ltd. – Value Analysis (LONDON:PTSG) : December 26, 2017

Capitalcube gives Premier Technical Services Group Ltd. a score of 81.

Our analysis is based on comparing Premier Technical Services Group Ltd. with the following peers – HomeServe plc, Mortice Limited, Universe Group PLC and Falanx Group Ltd. (HSV-GB, MORT-GB, UNG-GB and FLX-GB).

Investment Outlook

Premier Technical Services Group Ltd. has a fundamental score of 81 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It currently trades at a Price/Book ratio of (14.03).
  • PTSG-GB outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • PTSG-GB‘s relative asset efficiency and net profit margins are both around the median level.
  • 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.
  • Over the last five years, PTSG-GB‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s relatively high gross margin suggests some differentiation with pricing advantages versus peers.
  • Compared with the peers chosen, PTSG-GB has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company is likely overinvesting in a business with only median returns.
  • PTSG-GB has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

PTSG-GB has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 18.35% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 15.25%), and a well-cushioned interest coverage level of 11.42x, PTSG-GB 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 FLX-GB.

PTSG-GB has maintained its Quick & Able profile from the prior year-end.

  • PTSG-GB‘s interest coverage is upward trending but is still within one standard deviation below its four-year average interest coverage of 27.77x.
  • Though its interest coverage increased to 11.42x from 9.23x (in 2015), its peer median remained relatively stable during this period at 11.42.
  • Interest coverage rose 2.05 points relative to peers.
  • PTSG-GB‘s debt-EV is its highest over the last four years and compares to a low of 10.92% in 2015.
  • The increase in its debt-EV to 18.35% from 10.92% (in 2015) was also accompanied by an increase in its peer median during this period to 15.25% from 10.92%.
  • Relative to peers, debt-EV rose 3.10 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
HomeServe plc 15.25 1.06 10.12 41.07
Mortice Limited 29.17 1.07 2.78 39.88
Universe Group PLC 7.24 1.95 15.93 260.61
Falanx Group Ltd. 0 1.64 No interest exp 999
Premier Technical Services Group PLC 18.35 1.49 11.42 21.26
Peer Median 15.25 1.49 11.42 41.07
Best In Class 7.24 1.95 No interest exp 999

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Company Profile

Premier Technical Services Group Ltd. is a holding company which engages in the design, installation, and testing of electrical systems. It operates through the following segments: Access and Safety, and High Level Cleaning, and Electrical Services. The Access and Safety segment provides maintenance, inspections, and testing solutions for regulated area, design and installation of facade access and fall arrest equipment services. The High Level Cleaning segment provides cleaning and refurbishment support internally or externally on any building. The Electrical Services segment provides lightning and surge protection systems. The company was founded by John Robert Foley, Paul William Teasdale, Stephen R. Shipley and Bob Morton in 2007 and is headquartered in Castleford, the United Kingdom.

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