Morningstar | ITRK Updated Forecasts and Estimates from 30 Apr 2019
Narrow-moat Intertek produced full-year results that were in line with our expectations. Organic revenue growth was 3.7%, while operating margins continued to improve, rising by 40 basis points over the period on a constant-currency basis. We do not expect to make any material changes to our longer-term forecasts or to our GBX 3,900 fair value estimate aside from time-value-of-money movements. We believe the shares are currently overvalued.Divisionally, there was no departure from the growth pattern of previous years. Products, which generates almost 60% of group revenue, grew its top line at just over 5% organically, while trade, the second-largest business, grew at just over 2%, down from the 3% achieved in 2017. Resources, the problem child of the group, saw revenue essentially flat over the period, a marked improvement from the close to double-digit declines in 2016 and 2017. This improvement is in line with that of peers SGS and Bureau Veritas, as a combination of a shift toward operating-expenditure-related activities and an improvement in the capital expenditure project outlook by exploration firms takes effect.
We believe that Intertek, as one of the few globally diversified testing, inspection, and certification companies, is well positioned to take advantage of several long-term structural trends. These include the shift toward outsourcing, the increase in product complexity and testing requirements, and increased demand for consumer goods testing in emerging markets.
Intertek Group provides Assurance, Testing, Inspection and Certification (ATIC) services. Co.'s segments comprised of Products, Trade and Resources. Co.'s products-related division consists of business lines that are focused on quality and safety of physical components and products, as well reducing risk through assessing the operating process and quality management systems of its customers. Co.'s trade division consists of three Global business lines, Cargo & Analytical Assessment, Government & Trade Services, and Agriculture business. Co.'s resources division consists of two business lines, Industry Services, and minerals business.
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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