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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (34828)7/2/2009 9:25:04 PM
From: Spekulatius  Read Replies (1) of 78703
 
re HOS - not the cheapest company in the supply ship business based on the metrics I look at. based on EV/EBITDA and EV/Revenue the large peer TDW is cheaper by at least 20%. HOS P/E is lower but that is not a leverage adjusted metric.

HOS is not efficiently run from an asset perspective - for they do 430M$ revenue with 1.4B$ in assets (property plant and equipment or 30c/$ in hard assets) while TDW does 1.4B$ with 2B$ (70c/$ in hard assets). I think this is mostly due to HOS newbuild program. HOS fleet is younger which is good but they still have substantial newbuilds expenses in the near term future that seem to get close to their existing credit capacity. TDW on the other hand seems to base their Capex on their expected cash flow and hence they have very little debt. I don't think that book value is that great of a measure either since most newbuilds in the recent years have been build at very bloated costs - so they may sit on their balance sheet above replacement cost.
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