Testing Times for Intertek in Third Quarter

Narrow-moat Intertek’s third-quarter update showed some slight signs of improvement, with like-for-like revenue down 6.3% year over year in the July to October period. This was down from an 8% decline at the half-year point, but worse than results most recently reported by peers Bureau Veritas and SGS, although timing here may explain some of the negativity. With the company’s outlook for the full year providing little in the way of surprises, we view today’s negative market reaction as indicative of the high expectations baked into the current share price. At an almost 40% premium to our GBX 4,100 fair value estimate, we believe the shares to be deep in overvalued territory.