Estimates have been rising for
) after the company reported its fourth quarter results on March
It is a Zacks #2 Rank (Buy).
Based on current consensus estimates, analysts expect strong
double-digit earnings per share growth over the next few years. On
top of this, the company pays a dividend that yields a stellar
Valuation is attractive too, with shares sporting a PEG ratio of
Mobile TeleSystems, or MTS, is the leading telecommunications
provider in Russia, Eastern Europe and Central Asia. It provides
mobile services to over 100 million subscribers.
The company is headquartered in Moscow, Russia and has a market cap
of $18 billion.
Fourth Quarter Results
MTS reported its fourth quarter results on March 12. Revenue was
down slightly year-over-year to $2.982 billion as growth in the
mobile segment was more than offset by declines in fixed business
But operating income before depreciation and amortization (OIBDA)
rose 10% over the same period as the OIBDA margin expanded 410
basis points to 42.8% of revenue.
Meanwhile, earnings per share came in at 40 cents, a penny shy of
the Zacks Consensus Estimate.
Despite the slight earnings miss, analysts revised their estimates
higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank
Management stated in its Q4 press release that growth would be
limited in 2012 due to the macroeconomic environment. But the
company still expects 5-7% top-line growth and an OIBDA margin
between 40-42% for the year.
The Zacks Consensus Estimate for 2012 is now $1.69, representing
15% growth over 2011 EPS. The 2013 consensus estimate is currently
$1.87, corresponding with 11% growth.
In addition to strong growth, the company offers a dividend that
yields a stellar 5.6%.
The company pays an annual dividend based on net income, and for
2011 it paid out 72% of earnings. If earnings grow as expected,
then look for that dividend to increase over the next few years.
The valuation picture looks attractive for this Zacks #2 Rank (Buy)
stock. Shares trade at just 10x 12-month forward earnings and sport
a PEG ratio of only 0.7.
It also trades at just 10x free cash flow, well below the industry
median and its 10-year median.
The Bottom Line
With rising estimates, strong growth projections, a juicy 5.6%
yield and reasonable valuation, Mobile TeleSystems offers investors
attractive total return potential.
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
MOBILE TELE-ADR (
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