EAL -Time for a rerate

[lewinsky]

EAL, is worth having a look at.

They become ex a 1.5c share on the 18th May.

Their 3rd quarter profit after tax was $3.55 mill and half year was $2.051 mill.

Based on the upturn in the mining and supply sector, i think it is reasonable to expect a NPAT of $5 mill.

This would put them on a pe of under 6 and a div yield of 9.6%.

They have a good operating cashflow, but their balance sheet is sheet.

The goodwill is rather prominent.

This is in the shovel and spades categorary for me, and from where I am sitting looks a tad undervalued.

The Liz may have some views, which I always rate.

Cheers

LEW.

(who has put his toe in the water!).

[soulman]

Having just taken a $10K plus loss on SIP, I will pass on this coy straightaway. I am afraid of debt.

[Lizard]

Looks on track for return to $4m+ NPAT levels after a bad year last year. However, remains heavily reliant on mining industry contract work, so that is probably reason for the concern showing in the share price recently. One director purchased a few at end of May, so perhaps they are confident things will stay up.

I estimate forward EV/EBIT is about 6 - which isn't especially cheap for a bumpy contract industry. However, it is possible they can squeeze a bit more EBIT out of current turnover than what I've estimated.

Personally, I am not a fan of companies that are linked to mining capex at present, so wouldn't be going with this one - just not cheap enough.