established: 1976, ASX code: CAB, homepage: www.cabcharge.com.au

Overview
Cabcharge Australia is an unchallenged operator of the national taxi fares and public transport charging facility. It also owns three major Australian taxi operating businesses Communication Network, ABC Cabs and Black Cabs. More recently it has also obtained about 49% stake in one of the biggest private bus service operators, Westbus.

Analysis of 2007 financial results:

• Market Cap: Depending on the daily stock price of this company the total market capitalization is around $1.5 billion over 117 million shares on issue
• Shareholders Equity: $217 million making the stock’s book value approx. $1.85 per share (33% growth on FY 2006)
• Earnings per share: $0.44 making the average EPS growth in last 3 years about 28.9%
• Return on Equity: 23.5%, averaging around 22.5%pa in last 3 years
• Balance Sheet: Working capital of $28.6 million (ie. $0.24 per share) versus total debt of $62.4 million

GROWTH STOCK:

• Conservative forecast of average EPS growth in next 10 years: 13%
• Share price in 10 years time: about $28 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
• Total shareholders return in 10 years times: $34 (share price of $28 plus $6 of the 10 years worth of dividends if the current payout ratio of 65% persists)
• Rate of Return in next 10 years based on the beginning of December 2007 price of $10.8 per share: 12.1%pa

Pros and cons:
+++ Dominant company operating the nationally established, de-facto standard taxi fares facility
+++ Excellent ROE
+++ Strong balance sheet
— Planning further expansions into perhaps less profitable public transport areas
— Currently popular stock which is difficult to obtain at prices guaranteeing sufficient margin of safety

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This entry was posted on Monday, December 3rd, 2007 at 3:01 pm and is filed under Australian stock. You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.