Tele Norte Leste Participacoes SA (ADR) (TNE)

StockSpreadsheet (76.40) Submitted: 6/27/07 9:50 AM : Start Price: $17.92 TNE Score: 43.22

"Provides fixed-line telecommunications services in South America. The company operates in a number of states in Brazil, including Rio de Janeiro, Minas Gerais, Bahia, and Ceara." Hot company in a hot market.

Average annual sales growth of 23% over last 3 years. Average annual EPS growth of 54% over last 4 years. Pretax profit has been rising the last 3 years, as has EPS/book value. The debt-to-equity is high, averaging about 100% over the last 5 years, so this is of some concern, even though Telecoms tend to have high debt levels. Thier current payout ratio is about 52%, which should be sustainable, so their dividend, currently yielding about 1.9%, should also be sustainable. Their current P/E of 15.2 is inline with their average P/E over the last two years. Their trailing PEG ratio averaged a rediculously low 0.28 over the last 4 years, which I don't think is sustainable. Using a more reasonable growth rate of 20% going forward, (which would give them a PEG ratio of about 0.76, which is reasonable), I think this stock could reach $54.00 in five years, about 2-1/2 times its current value of $19.16. Given this growth and its decent dividend yield of 1.9%, I would rate this stock a buy.

Report this Post Replies: 4 | Reply