September 4, 2012 / 5:16 AM / 5 years ago

MIDCAP-Australia's Alesco Corp looks attractive on valuations

Alesco Corp Ltd looks the most attractive among 66 stocks in Australia’s industrials sector, data from Thomson Reuters StarMine shows.

The building products maker has a Value-Mometum (Val-Mo) score of 100, the highest in the sector and a Relative Valuation (RV) model score of 92, also one of the best in the group. The higher the RV score the cheaper the stock.

The data includes firms tracked by at least three analysts.

The company has experienced a 22 point rise in its earnings quality (EQ) score to 56 since its May 2012 filing.

Alesco’s free cashflow (FCF) as a percent of sales for 2012 exceeds industry average by 6.5 percent. The company’s FCF increased A$6 million to A$20 million between November 2011 and May 2012, while its net income declined A$28 million to a loss of A$21 million during the same period.

All the nine analysts tracking Alesco give it a ‘hold’ rating.

The stock currently trades at 34 percent of its intrinsic value of A$5.60. It is up over 73 percent year-to-date while the broader index is up 5.85 percent for the same period.

At the other end of the spectrum, two firms that fare badly on valuations in Australia’s industrials sector are Paperlinx Limited and Transurban Group with 3 and 10 respectively.

CONTEXT:

Alesco has been fighting a takeover attempt by DuluxGroup Ltd since March. On Monday, Dulux extended the closing date of its offer for the company to Oct. 2.

StarMine’s Val-Mo model provides a 1-100 percentile ranking of stocks and rates companies based on a combination of value and momentum metrics.

StarMine’s Relative Valuation model combines six different ratios that measure a company’s valuation and then ranks it compared with all other stocks in the same region. (Reporting By Reshma Apte; Editing by Gopakumar Warrier)

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