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Saturday, June 27, 2009

Brazil Telecom Participacoes S/A (BRP) EPS Reported Estimated $8.05 per shared Healthy Dividend is in Order

Brasil Telecom in a recently deregulated industry, also involved in a recent merger with another top Brazilian telecom provider, in an emerging market where people are in increasing need of phone/mobile services. A growth pick.

BRP is moving increasingly into mobile communications and this is where its "growth edge" should come from. It appears to be undervalued relative to its growth prospects and has an excellent balance sheet. Some financials: PEG is less than 0.5, PE ratio about 1/2 of that for industry, yet 5 yr. est. growth at 30%+ !. Gross profit margin 37% and lots of free cash. Brazil headed for upgrade to investment status in next year. Given low growth rates at home, I think this overseas investment will be a winner. Big run up but hitting new highs and should go higher.

Currently has more cash $21.82 on the books than microsoft, current book value $40.57 trading at 0.96 times book. Carrying a P/E of 6.19 and a forward P/E of 4.85. Not a lot of debt for a telecommunication company.

Disclosure I am long BRP in my utilities folio.

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