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 Aggreko (LSE:AGK) to determine whether you should consider buying the shares at 2,230 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:

StockPrice3-Year EPS GrowthProjected P/EPEGYield3-Year Dividend GrowthDividend Cover
Aggreko 2,230 pence 38% 22 1.4 1% 70% 4.2

The consensus analyst estimate for next year's earnings per share is 102 pence (16% growth) and dividend per share is 23 pence (11% growth).

Trading on a projected P/E of 22, Aggreko appears cheaper than its peers in the Support Services sector, who are currently trading on an average P/E of around 18. Aggreko's high P/E and double-digit growth rate give a PEG ratio of around 1.4, which implies the share price is slightly expensive for the earnings growth the firm is expected to produce.

Offering a 1% yield, the dividend is less than half the 2.4 % Support Services sector average. However, Aggreko has a three-year compounded dividend growth rate of 70%, implying the payout could soon catch up and overtake that of Aggreko's peers.

Indeed, the dividend is more than four times covered, giving Aggreko plenty room for further payout growth.

Strong growth and a high valuation
In my view, Aggreko's high valuation is due to its strong projected growth.

However, I also believe Aggreko's strong growth is coming under pressure. The group recently reported its capital expenditure would be reduced during the first half of 2013 due to slowing customer demand. The company also admitted adverse exchange-rate movements and bad- debt provisions had slowed revenue growth.

Despite these and the obvious economic headwinds, revenue actually grew 22% in the third quarter of 2012. That performance, in my view, was due to extra customer activity related to the Olympics, as well as acquisitions.

Worryingly, though, debt has been on the rise, advancing 62% since last year. However, gearing still appears acceptable, with borrowings accounting for only 11% of shareholders' equity.

I think it is surprising to learn that Aggreko generates most of its revenues and growth from its home market here in the U.K. Growth within the company's domestic division was 32% during last quarter, compared to 15% internationally. These results could be distorted by the Olympics, however.

Anyway, in my opinion, Aggreko needs to maintain a high level of growth to sustain its current valuation. However, it is beginning to look as if Aggreko's growth spurt is coming under pressure. So overall, I believe now does not look to be a good time to buy Aggreko at 2,230 pence.

More FTSE opportunities
Although I feel now may not be the time to buy Aggreko, I am more positive on the FTSE shares highlighted in "8 Dividend Plays Held By Britain's Super Investor." This exclusive report reveals the favourite income stocks owned by Neil Woodford -- the City legend whose portfolios have thrashed the FTSE All-Share by 200% during the 15 years to October 2012.

The report, which explains the full investing logic behind Mr Woodford's dividend strategy and his preferred blue chips, is free to all private investors. Just click here for your copy. But do hurry, as the report is available for a limited time only.

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


Rupert Hargreaves and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.