Morningstar | Narrow-Moat Bureau Veritas Has a Positive Start to the Year
Narrow-moat testing giant Bureau Veritas verified a solid first quarter, with organic revenue growth of 4%, in line with the pattern witnessed in full-year 2018. Management confirmed full-year 2019 outlook and we believe the business is on track to meet our expectations. As such, we do not expect to make any changes to our numbers or to our EUR 21 fair value estimate. We believe the shares are currently fairly valued.One of the most encouraging aspects of these results was the broad-based nature of the top-line growth. While the certification business saw organic revenue declines, due to tough year over year comparisons, it was alone in this regard, with all other businesses delivering positive growth over the quarter. While agri-food & commodities was the standout performer, delivering almost 8% topline organic growth, the pick-up in growth in the marine and offshore business was the most pleasing. Following three successive years of negative growth, the division is well on track to deliver a positive result in 2019, growing by 3.2% in the first quarter of the year.
In the longer term, we believe the TIC sector, and Bureau Veritas as the second-largest player in the industry, will continue to benefit from several structural trends; including the increased outsourcing of TIC activities as companies, and multinationals in particular, seek to improve quality and adhere to an ever-increasing level of regulation.
Bureau Veritas specializes in inspecting, testing, auditing or certifying products, assets (such as buildings, industrial infrastructure, equipment and ships) and management systems (particularly against ISO standards) based on regulatory or voluntarily adopted standards. Co.'s operations can be divided into eight businesses: ship classification; industry services; inspection and verification of equipment in service; construction services; certification of management systems or services; inspection and testing of consumer products; services related to customs control and international trade services; and inspection and testing of commodities.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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