Is Now the Time to Buy Intertek Group?

LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I'm hoping to pinpoint the very best buying opportunities in today's uncertain market.

Today I am looking at Intertek Group (ITRK 0.12%) (IKTS.F 3.80%) to determine whether you should consider buying the shares at 3,442 pence.

I am assessing each company on several ratios:

Price/Earnings (P/E): Does the share look good value when compared against its competitors?

Price Earnings Growth (PEG): Does the share look good value factoring in predicted growth?

Yield: Does the share provide a solid income for investors?

Dividend Cover: Is the dividend sustainable?

So let's look at the numbers:

The consensus analyst estimate for next year's earnings per share is 152 pence (16% growth) and dividend per share is 47.7 pence (16% growth).

Trading on a projected P/E of 22.6, Intertek appears cheaper than its peers in the support services sector, which are currently trading on an average P/E of around 19.6.

Intertek's P/E and double-digit growth rate give a PEG ratio of around 1.3, which implies the share is fairly priced for the near-term earnings growth the firm is expected to produce.

Offering a 1.2% yield, Intertek's dividend income is about half of the sector average. However, Intertek has a three-year compounded dividend growth rate of 46%, implying the yield could soon catch up to that of its peers.

Indeed, the dividend is more than three times covered by earnings, giving Interek plenty room for further payout growth.

So, is now the time to buy Intertek?
Intertek is a world-leading quality and safety services company and provides product testing and certification for a wide variety of goods and services.

Being one of the biggest and most trusted testing companies in the world means that Intertek should never be short of business. In fact, over the past five years, Intertek's earnings have almost doubled as demand for the company's services has continued to remain strong, despite the economic environment.

Furthermore, during the past ten years, the company's earnings have grown an astounding 340%.

Alongside this good performance, Intertek's management remains proactive and, during 2012, the group acquired six additional businesses in order to complement organic growth. In addition, so far this year the company has announced two further acquisitions.

Indeed, Intertek's growth over the past five years has really impressed investors, so much so that, over the past year, Intertek's share price has gained around 36% -- almost 24% more than the FTSE 100.

That said, this rapid rise in the company's share price over the past year, alongside Intertek's high valuation in relation to its sector peers, lead me to believe the company is overvalued. So, overall I feel that now does not look to be a good time to buy Intertek at 3,442 pence.

More FTSE opportunities
Although I feel now may not be the time to buy Intertek, I am more positive on the FTSE 100 share highlighted within this exclusive free report.

You see, the blue chip in question offers a 5.7% income, its shares might be worth 850 pence compared to about 700 pence now -- and it has just been declared "The Motley Fool's Top Income Stock for 2013"!

Just click here to read the report -- it's free.

In the meantime, please stay tuned for my next verdict on a FTSE 100 share.

link