Got a run in the fin. Bell Potter forward estimates create clear...

Got a run in the fin.

Bell Potter forward estimates create clear picture of PS&C

PUBLISHED: 10 MAR 2015 16:10:33 | UPDATED: 10 MAR 2015 16:38:29
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Information and communication technologies business PS&C reported profit 11 per cent below expectations for the half-year.Photo: Louise Kennerley

TREVOR HOEY

Information and communications technology services group PS&C, delivered a mixed result for the six months to December 31, 2014. However, what appears to have stood in the way of investors recognising the quality of the operational performance was the negative earnings impact from investments in its head office, as well as its people and security businesses.

Indicative of this was Bell Potter Securities' observation regarding interim earnings before interest, tax, depreciation and amortisation of $3.5 million which was 5 per cent ahead of its forecasts. Notwithstanding this outperformance, net profit was 11 per cent below the broker's expectations, mainly attributable to slightly higher depreciation, amortisation and interest.

In upgrading forward EBITDA estimates and slightly downgrading earnings-per-share expectations, Bell Potter has factored in these components. The broker maintained its 12-month share price target of $1.20, implying a price-earnings multiple of 10 relative to 2014-15 forecasts. This is well below the industry group average multiple of 14, effectively validating the price target.

PS&C is trading well shy of Bell Potter's 12-month share price target, and at current levels the yield on offer is approximately 7 per cent relative to the broker's 2014-15 forecast dividend of 6 per shar