$LAM.L – Lamprell – looking undervalued

Investors in recovery-play oil-rig maker LAM (Lamprell) are having a boring time lately. Starting the year at around 94p, they went up to around 180p in mid-May, but have since drifted down to around 140p, and have been tracking sideways since about mid-June. They’ve made a couple of attempts to break a resistance level of 150p, but just couldn’t manage it. As levels approached 150p, investors must have been excited that this thing was finally going to do the business, only to have it pull back.

I decided to do a quick-and-dirty valuation. I’ve taken a look at some summary accounts from Sharelock Holmes, and it looks like a 10% net profit margin is reasonable for this company. If it can do revenues of £650m, at a 10% NPM, then, if I apply a modest 10X multiple, I get a fair value for the company of … £650m. There are around 260m shares in issue, so that’s a fair value of 250pps. At around 142pps currently, that’s an implied upside of just over 75%.

You can argue about factoring in net cash, working on EBIT basis, and all that, but I’m just trying to work out “is it obviously undervalued”.

Currently no holding, but I’m thinking about it.

Advertisements

About mcturra2000

Computer programmer living in Scotland.
This entry was posted in Uncategorized. Bookmark the permalink.

One Response to $LAM.L – Lamprell – looking undervalued

  1. Yep. Even though I sold out the day after the last results it’s still mispriced. Somewhere in the 220p to 300p range is reasonable.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s