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Shine Corporate vs Slater & Gordon

Recently listed legal firm Shine Corporate (ASX: SHJ) has released 2013 results. Shine focuses on damage-based plaintiff litigation and operates nationally although, its major representation is in Queensland. The announcement revealed:

  • Revenue of $105.4 million
  • NPAT (net profit after tax) of $17.5 million
  • EPS (earnings per share) 12.3c – based on weighted average number of shares
  • Gearing ratio 3.2% (net debt)

With largely regional exposure, Shine has the advantage of being the local go-to place for clients to contact should they wish to pursue personal injury or other damages claims. Cases can be undertaken on a no-win, no-fee basis. With a low gearing ratio, Shine has the capacity to pursue more acquisitions in order to spread geographic reach.

Projections indicate a 9% increase in revenue and a 12% increase in profit over the course of 2014, with key assumptions including maintaining an 84.5% recoverability rate and the addition of 18 new fee earners (practices).

So how does Shine compare with the other listed legal firm Slater & Gordon (ASX: SGH)?

Using 2013 results, Shine is capitalised at 15.5 times earnings and Slater & Gordon at 16.4 times. On growth prospects Slater & Gordon appears far better positioned with scale expansion into the UK. Shine may find integrating numerous smaller practices challenging – by comparison Slater & Gordon already has a significant national footprint. Of the two, Slater & Gordon appeals as the better value.

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Motley Fool contributor Peter Andersen owns shares in Slater & Gordon.

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