Bottom Line: BSM passes first test
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.BRITISH School of Motoring passed its first test as a learner public company yesterday. Institutional interest in its share placing was reportedly strong, despite a relatively expensive price of 170p a share.
That price translates into a prospective p/e ratio of about 15 times, based on a pro-forma profits forecast of pounds 4.35m before tax this year.
Potential investors through the intermediaries offer part of the flotation have to ask themselves whether BSM's long-term prospects justify such a market rating at a time when there is no shortage of other new issues around.
On the positive side, BSM is the dominant player, with 15 per cent of the market, and the brand leader. It is well run, with an experienced management, and has just signed an attractive sales and marketing deal with Vauxhall.
The company argues that it will benefit from legislative changes requiring better standards of driving supervision. But the changes may attract other players to a business that has relatively low entry costs. If the AA marketed its driving lessons business more aggressively, the strength of its brand means it could prove a potent threat.
BSM's very dominance makes it difficult to see how it can significantly expand its business over the long term. In the short term, however, it is clearly solid and affords little risk to widows and orphans. Indeed, its shares will probably go to a small premium when dealings begin. But there are plenty of other potentially more exciting investment opportunities around.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments