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Bristow Flies Helicopters

Recs

6

January 01, 2010 – Comments (0) | RELATED TICKERS: BRS

 

We noticed the other day, that according to the "analysts", earnings growth for the industry that the Bristow Group, Inc. (NYSE: BRS) is in, is expected to decline by almost 3% next year while the company's earnings are expected to grow by 5%. Curious we took a look.

Basis

Financial information contained in this report, is based on the company's most recent Form 10-K filing for fiscal year ending March 31, 2009, as filed with the Securities and Exchange Commission on May 21, 2009.

What They Do
Bristow is a global organization, offering a wide-ranging array of helicopter services, through its brand names Air Logistics and Bristow Helicopters.

The company provides helicopter transportation, maintenance, search and rescue, and related services to the offshore oil and gas industry as well as other business sectors.

Contract helicopter maintenance and training programs are available ensuring that clients receive the highest degree of flexibility and the safest, most experienced flight and maintenance crews available.

The company also provides pilot training through Bristow Academy.

Short-Term Investment
With a first resistance at $39.20, a recent close of $38.45, and first support at $30.20, we simply don't see any reason to put $38+ at risk for a potential gain of 2%.

Long-Term Investment
We like the company's liquidity with a current ratio of 4.5, a quick ratio of 3.3, and a cash ratio of 1.9. All of these are positive signs that management is paying attention to the company's business and the company's role in its industry.

What were are not impressed with is the company's free cash flow at ($7.16), or the company's increase in debt of $91.5 million, preferring instead that management tell the shareholders to go pound sand when it come to dividends and apply that $15.1 million toward the reduction of the company's debt.

Or put another way, instead of spending $33 million on interest payments to service the debt the company has, management could have taken the $15.1 million it spent on dividends and
applied it to the company's debt service.

Given management's seeming reticence to reduce the company's debt, coupled with the company's lack of free cash flow, we believe a Reasonable Value Estimate for the stock is between $7 and $8.

Wax

For the Bristow Group Raw Value worksheet, please click here.

 

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