Quindell vs The UK Listed Mid Caps

Today we're going to have a look at where Quindell stands against a wide range of upper end small and mid cap companies listed in the UK.


The criteria for my total selection of companies were the following:

- The companies must be listed on the LSE in GBP
- A Market Capitalisation range from £300M and £7.5B
- A PE ratio range between 0.5 and 250667

You can find the tool I used for this stock screen here:

https://www.google.co.uk/finance?ed=uk&ei=1QYQVODEMqzXwAOfkIDwBA#stockscreener



Results:

- In total there were 410 companies.


- Quindell came in 18th place when the companies were ordered by PE ratio (P/E=3.84).


- Quindell was in the top 5% of the sample selection when ordered by PE ratio (4.39% to be exact).


- On removing the investment trusts, Quindell ranks 9th by PE ratio.


- Quindell came in 248th place when ordered by market capitalisation (£757.40M).


Analysis:

Fortunately for me, the analysis here is very simple and can actually be expressed in an easier manner if I give some examples of other well known companies in that total selection:

                                         Market Cap      P/E
- Kingfisher:                     7.497B            10.59
- British Land Company  7.330B             6.56
- Sainsbury                       5.550B            7.85
- William Hill                  3.067B             16.05
- AVEVA Grp                  1.398B             28.25
- JD Wetherspoon            929M               20.05
- Debenhams                   792M               8.43
- Prezzo                           324M               22.50
- Dart Grp                        332M               9.19


Nevertheless, if we are to use some of these companies as examples on which Quindell could base itself, we can see that for Quindell to have even the same PE ratio as Debenhams, it would be on a market capitalisation around two and a half times its current market capitalisation.

For Quindell to be valued on a PE ratio around that of JD Wetherspoon, we would expect Quindell to be valued at around five times its current market capitalisation.


Conclusion: 

I conclude that Quindell is exceptionally undervalued at its current price on a comparative PE ratio basis.


Evaluation:

Now, PE ratios do have a few pitfalls, which I have discussed here (if anyone is interested):


http://themaskedstocktrader.blogspot.co.uk/2014/07/understanding-ratios-definitions.html


Further to this, you could argue that Google Finance is not the most accurate program and thus, these figures generated may also be inaccurate.


I would encourage people to play around with this stock screener and try to make their own conclusions too. Especially now that Quindell has won its law suit against Gotham City Reports, there should be much more perceived stability in the company at it's current levels, which should help to encourage upwards pricing pressure over the coming months.