Andrew Buckley, Cardno

Andrew Buckley, Managing Director of Cardno (CDD), spoke to the Morgans network at our Morning Meeting on 22 November 2012 following the company's 1H13 profit guidance released this week.

The company said market conditions have been more difficult than expected in Australia, resulting in softer than anticipated performance for the first half.

Watch the video below:

Key points

Key points from Mr Buckley's presentation include:

  • First half guidance A$36m to A$40m means yet another record NPAT and an increase on pcp (1H12)
  • CDD are seeing some market challenges, particularly in the area of building structure and build services in Australia but it is managing the challenges with a view to control costs and margins
  • Hurricane Sandy did close some of CDD's offices located in north east United States but subsequent revenue losses are likely to be fully recovered, and more, in the 2nd half of FY13
  • Revenue continues to grow organically at 7%, which provides the company with the flexibility to work on profitability

Our view

Despite market challenges the business remains well positioned for ongoing growth. Although previous forecasts and consensus appear ambitious, we continue to forecast growth in FY13, meaning CDD will deliver yet another record Revenue, NPAT, EPS and DPS. We believe at the current share price CDD offers great value due to:

  • its ability to adapt to changing markets;
  • its strong leverage to an improving US economy and a rapidly growing environmental consulting market; and,
  • for a business with a demonstrated track record of growth it is trading at undemanding fundamental valuation metrics of just ten times FY13 earnings and offering a dividend yield (partly franked) of 6.5%.

More information

Clients can login to view detailed research on CDD, including our target price. Alternatively contact your Morgans adviser or nearest Morgans office for more information.

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