Corporate Express Australia Limited (CXP) A Quick Analysis of the results

weiomduWell I had a busy weekend but as I promised some information on Corporate Express Australia Limited (ASX:CXP) I thought I better have a quick analysis of the companys half year results and see if the fall has been too large.

Revenues Climbed 7%. This is a historically low figure for this company and suggests the company is not growing as fast as it has been. The figures for the last few years have all been 10%+. Is the slow revenue growth something to worry about ? maybe ... But I would need to see a few years of stagnant growth before I said it was no longer growing at a good pace. 7% growth still beats inflation.

Profit only gre 1.7%. This is a poor result. But they are not losing money which is a good sign. The company expects that the result was lower due to one off costs which will not occur in the next half and also should add to the bottom line in the second half results. Do I expect them to increase this for their full year report ? Definitely...

Earnings per share were 17.7c . An ok result as this transforms to a result of 35.4c which is higher than last years which was 35.1c . The esitmates for the year range from 39c to 41c. I am not so optomistic but I do expect that they should get to at least 37c. Assuming they do achieve 37c theya re currently at a PE of 13 (price $4.82). If we assume they can achieve analyst expectations and get to 39c it is on a PE of 12.39. Is this a good price for the stock ? Well there is some value in it. The industry historically sits just above the ASX average. At this moment is is 16 times earnings so CXP should be priced at $5.92 assuming earnings of 37c.

Is it time to buy CXP ?

Well it might go lower at this stage. But there are certain factors which might hold it up. These include a divi yeild of 4% and the current buy back of shares which is taking place. If you can get this share around $4.50 or lower it would definately be a good buy in the years to come.

Tehcnically the share should hold at least $4.50 with another level of support at $4.00. I can not see it going lower than this price without some major accoutning flaw or scandal.

The problem is people will soon take notice of this share at this price and will start to buy it as it is definitely a good stock which is out of favour with analysts. We should wait for the turnaround on the chart before putting our cash in but an inital buy somewhere around $4.50 would be a great investment.

I am going to do a full report when I get a chance. This will look at risks, reasons for growth, etc.

Good Luck.