The Transurban Group (ASX: TCL) share price has edged higher in morning trade after the toll road giant announced a 11.3% jump in toll revenue to $502 million for the quarter ending March 31.
At the time of writing Transurban's shares are up 1% to $12.06, stretching their year-to-date return to a stellar 16%.
Overall I can't say I'm surprised to see its shares climb higher today. I feel it is fair to say that this was yet another impressively strong quarter for Transurban and its network of roads.
Average Daily Traffic (ADT) increased 5.3% during the period thanks to strong growth in the Brisbane and Greater Washington Area networks.
Brisbane ADT jumped 20.4% to 331,000 despite the negative impact of Cyclone Debbie. This led to a 28.9% lift in toll revenue to $94 million. Greater Washington Area ADT climbed 15.8% to 91,000 trips, with toll revenue growing 20.9% to US$35 million.
Whilst growth was a touch slower in Sydney, I felt its roads performed well nonetheless. Sydney toll revenue increased 9.8% to $215 million, with average daily traffic increasing 3.9% to 638,000 trips.
The only real disappointment was its Melbourne network. Melbourne ADT fell 0.5% to 806,000, leading to minimal toll revenue growth of 1% to $165 million. The decrease in traffic was the result of planned network wide disruptions caused by the CityLink Tulla Widening project.
Should you invest?
Whilst I am a big fan of the company, I'm not a huge fan of its current valuation. At around 97x trailing earnings Transurban is incredibly expensive in my opinion.
Its defensive qualities and strong long-term growth prospects are certainly attractive, but even so I still find it hard to justify the exorbitant premium.
As a result I think investors would be better off holding out for a pull-back in its share price. In the meantime investors may be better served with cheaper defensive investments such as Sydney Airport Holdings Ltd (ASX: SYD), InvoCare Limited (ASX: IVC), or ASX Ltd (ASX: ASX).
