Broker snap: MITIE's peers preferred

18th May 2009 13:11

Support services MITIE delivered a solid set of results on Monday morning but broker KBC Peel Hunt sees better value elsewhere in the sector.The broker's earnings estimates for 2010 are at the lower end of the market range, at £80.6m for adjusted pre-tax profit. Ahead of the company's meeting with investment analysts the company is keeping its estimates unchanged, but sees a "4% uplift to earnings due to lower tax, minority interest and shares."Despite the strong cash generation and the management's "robust outlook", KBC believes the shares look vulnerable on 12 times projected 2010 earnings.Broker Charles Stanley backs up this view, saying the shares represent poor value in comparison with sector peers Connaught, currently trading at 12.6 times projected 2010 earnings, and Mears, trading at 10.1 times projected 2010 earnings.Charles Stanley's believes Connaught and Mears's concentration on the more stable public sector and the greater visibility this gives to future earnings gives them the edge over MITIE.