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Would Benjamin Graham Buy ComfortDelGro Corporation Limited?

It currently has a presence in seven countries, including China, Malaysia and the UK, where it operates over 46 thousand vehicles. In Singapore, it is the largest operator of taxis. It is a multinational land transport company with its main listing in Singapore.

The company is ComfortDelGro (SGX: C52), which operates Comfort and City Cabs.  Combined they have a fleet size of 16,600 taxis and manage more than 32 million taxi bookings a year.

SBS Transit (SGX: S61), which is a major operator of bus and rail operator in Singapore, is also 75% owned by ComfortDelGro. With such a large customer base, it is hard to imagine going anywhere in Singapore without putting money into the pockets of ComfortDelGro.

But does this translate into a value buying opportunity?

Steady earnings over the last five years means ComfortDelGro boasts a healthy earnings yield over 5%. It has also been able to reward investors with a dividend yield of 2.8%, which is marginally better than a risk free investment.

Such rewards are rarely available cheaply, and it may seem that the transport specialist is no exception. The company’s total current assets stand at around only one fifth the value of the company, while the entire book value is less than half of the markets valuation.

Despite this, ComfortDelGro appears to have a healthy balance sheet. A current ratio of slightly over one paints a picture of a company that should be in control of its liabilities, as does the fact that the total debt is less than 15% of the market value of the company.

So far there has been nothing to suggest that ComfortDelGro is an obvious value opportunity. So, for now Benjamin Graham might give it the thumbs down.

However, looking to the future, as part of an industry that is heavily reliant on fuel consumption, ComfortDelGro could be set to see rising profits. This is, of course, thanks to the falling price of oil. If its profits can rise, ComfortDelGro could offer slightly more to those investors seeking value opportunities.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.