February 18, 2007
Evaluation: Brasil Telecom Participacoes (BRP)
Brasil Telecom Participacoes, a holding company that whose major asset is Brasil Telecom S.A. drives revenue by providing landline calls, data transmission, internet, and wireless services in Brazil.
Institutional ownership at 38.70%, a healthy market cap of $3.12 billion, and operating cash flow (ttm) of 1.10B indicate some establishment and high probability of growth as Brazil develops. Quarterly revenue growth of 5.80% (yoy) demonstrates a potential upward trend, one that has not incurred a run-up in price, yet. For short-term gains on BRP a beat of 1.96 but only a 52-week change of 4.70% are also good signs. Other solid indicators for future growth include a price to sales ratio of 0.64 and a price to book ratio of only 1.24, both illustrating solid business foundation and a lag in pricing correction for company’s sales.
Tied to volatility and potential instability of Brazil, there is and will be for the near future uncertainty that is not caused by anything within BRP, rather Brazil as a whole. Debt of $2.57 billion and a debt to equity ratio of 1.018 are cause for concern about ability to sustain future growth. However, over the next year a current ratio of 1.545 does indicate, at minimum, stability.
BRP is a good growth and value stock with above average financials. Analyst recommendations, according to Thomson and First Call, range from $43.00 to $62.00 with mean and median price targets of $52.01 and $50.85 respectively. Considering that BRP currently trades at $42.98, this company has room and reason for growth.
Posted by jwbir at February 18, 2007 12:41 PM