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Ausdrill up 12% on full-year results

Shares in Ausdrill (ASX: ASL) are trading 12% higher in early trade this morning thanks to a better-than-expected annual report.

Unlike Emerco (ASX: EHL) or NRW Holdings (ASX: NWH), Ausdrill is a more diversified end-to-end mining services company, providing ‘packages’ for new and existing mining projects throughout Australia and Africa.

Some of the key results from today’s annual report include:

  • Sales Revenue of $1.128 billion (up 6.6%)
  • EBITDA of $272.7 million (down 5.5%)
  • EBIT of $149 million (down 13.5%)
  • Profit after tax of $90.4 million (down 19.4%)
  • EPS of 29.63 cents, (down 20.5%)
  • Final dividends of 5.5 cents per shares fully franked
  • Gearing ratio of 36.6%
  • Cash of $78.8 million
  • Interest cover of 6.9 times

Although the company’s results on face value may look bleak. The share price has been punished in the past 12 months and some might argue that the stock has been hit too hard by investors’ expectations.

ausdrill
Source: Google Finance

Per the graph above, Ausdrill shares were pushed down almost 80% but have mildly recovered. With a relatively comfortable debt position and a dividend of around 10.7% (when grossed-up) it’s easy to see why some investors have decided to purchase shares in the company.

At current prices and earnings, the company trades on a P/E of around 4.8 which isn’t surprising given the amount of uncertainty going forward.

Outlook

Although the past 12 months have resulted in fewer new projects and cost cutting by both major and smaller mining companies, Ausdrill expects the medium term to stabilise earnings. Although, in the short term, the company expects mining operations to “change” it said “Ausdrill continues to pursue a strategy of providing a complete mining service solution to the mining industry, and believes this will provide the basis for the Group’s continued growth and success in the years ahead”. It also said “opportunities remain for the Group to secure new work in the near term”.

Foolish takeaway

Today’s result was expected. When the company’s share price dropped to below $0.90 it was a bargain but, currently trading around $1.42, investors must take a more bullish stance on the outlook. However the company does pay a great dividend and with a fall of over 50% in share price from this time a year ago, a large part of the downside has been accounted for.

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Motley Fool contributor Owen Raszkiewicz owns shares in Ausdrill.

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