BYL a buy at .33?, page-18

On the original question of BYL's SP, an email from FSArena a few days ago inclined me to again compare BYL with SWL.

SWL and BYL are small companies that have similarities in the road and bridge building, although they have geographic and speciality differences, and their way of doing business varies (for instance, BYL tends to work independently, or take the leading role in JVs, whereas SWL actively seeks to cooperate more with other companies). However, BYL trades at a much lower P/E ratio – a matter on which I have commented on a few times in past years to suggest that BYL was undervalued, and/or SWL was overvalued. From memory, when I looked at SWL a few years ago, its P/E ratio was in the high teens, and BYL's was well below 10.

In crude terms, this disparity of P/E ratio remains today. Here are some metrics to support this contention. We will soon be able to add metrics for 2015 to complete the picture.

BYL............... 2012 ..... 2013 ..... 2014
EPS .............. 8.6c ...... 9.3c ....... 8.8c
DPS .............. 2.8c ..... 3.0c ....... 3.0c
Current SP ................................. 34.0c
Capitalisation ............................ $43m

SWL
EPS .............. 11.9c ... 11.5c ..... 12.6c
DPS .............. 6.0c ..... 8.0c ….... 7.5c
Current SP ................................ 111.0c
Capitalisation ............................ $97m

According to the FNArena email that I received on 10/07/2015, Morgans rates SWL as a “hold” with a target SP of $1.26. Morgans's expected EPS for 2015 is 10c, and the DPS is 5c. Hartleys expects (February estimate) BYL's EPS to be 7.35c and the DPS to be 3c. If SWL is valued at $1.26, then BYL should be valued by at least half that. The $1.26 may be too generous, so I am not suggesting 63c is a valid estimate for BYL, but I am prepared to venture that 34c is too low.