Valuecruncher has placed a mid-point valuation of $3.94 per share with a range of $3.40 to $4.49 on the Freightways Ltd. Freightways was trading at $4.40 at the close on Thursday 29 March.
The current share price is at the upper end of the Valuecruncher valuation range and equates to an EV-EBIT multiple of 13.9 compared to the Valuecruncher mid-point of 12.8. The average multiple of a selection of domestic and international comparables is 12.9. Mainfreight is the closest listed domestic comparable and it is currently trading at an EV-EBIT multiple of 16, this reflects the significant EBIT growth expected for the current financial year. International express delivery companies FedEx and UPS currently trade at EV-EBIT multiples of 11-12.
Valuecruncher has forecast Freightways revenue to grow at 10% per annum for the next 3 years at the current EBIT margin of 20%. Freightways has made a number of acquisitions including Australian information management firm DataBank. These acquisitions have the potential to deliver higher growth rates and margins that could justify Freightways trading at the upper end of the valuation range. Using a short-term growth rate of 12% Valuecruncher values Freightways at $4.23 per share.
Valuecruncher Terminal Growth Rate: 3%
Valuecruncher Cost of Capital (WACC): 11%