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What Investors Should Know About ComfortDelGro Corporation Ltd’s Growth, Dividend, and Valuation

Land transport giant ComfortDelGro Corporation Ltd (SGX: C52) is a company whose services are likely to be familiar to many who live in Singapore – that’s because the company runs buses, trains, and taxis here.

But its business performance may not be that well known. So, here’s a look at three important aspects about the company, namely, its growth, dividend, and valuation

1. Growth

The table below shows how ComfortDelGro’s revenue and operating income have changed from 2011 to 2015:

comfortdelgro-revenue-and-operating-income-table
Source: ComfortDelGro’s earnings releases

What’s striking here is that ComfortDelGro’s reveue and operating income have both been growing consistently for the period under study.

2. Dividend

At its current share price of S$2.58, ComfortDelGro has a trailing dividend yield of 3.6%, which is higher than the SPDR STI ETF’s (SGX: ES3) yield of 3.1%. The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI).

To assess the sustainability of the company’s dividend, we can look at two financial ratios: the debt-to-shareholders’ equity ratio and the profit pay-out ratio. Do bear in mind that there are many other things to look at beyond the two ratios.

The debt-to-shareholders’ equity ratio is a gauge for the level of financial risk a company is taking on. Meanwhile, the profit pay-out ratio is the percentage of a company’s profit that is paid out as a dividend. Generally speaking, the lower the two ratios are, the better it could be.

Based on ComfortDelGro’s latest financials (as of 30 September 2016), it has a debt-to-shareholders’ equity ratio of just 19%. With its trailing earnings per share of S$0.146 and dividend per share of S$0.0925, the company has a pay-out ratio of 63%.

3. Valuation

ComfortDelGro currently has a price-to-earnings ratio of 17.6. There are two things to note about this PE ratio.

Firstly, it is near the middle of where it has been in the past five years, as shown in the chart directly below:

comfortdelgros-pe-ratio-over-past-five-years
Source: S&P Global Market Intelligence

Secondly, ComfortDelGro’s current PE ratio of 17.6 is higher than the PE ratio of 12.4 that’s carried by the SPDR STI ETF.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.