Una McCaffrey

Ryanair is the most competitive public company in the Republic, according to a new in-depth analysis of Irish-listed companies from NCB Stockbrokers.

The study, which aims to judge companies' competitiveness according to factors such as their management team and their location, finds that Kerry Group, IAWS and Bank of Ireland are also particularly competitive when measured against the wider market. The least competitive of the 32 companies analysed by the broker was Gresham Hotel Group, which last Friday was confirmed as a takeover target.

NCB defines competitive advantage as a firm achieving a better return on invested capital over a period than might be expected or "required" of a company of its type. The theory is that any company that uses these funds better than might be expected is possessed of a particular "advantage" that cannot be copied by competitors.

This "supernormal profitability" is measured with reference to six main factors: management, proprietary technology, location, dominant market share, regulation and powerful brands.

The broker acknowledges, however, that "sometimes the advantage has been created through dint of effort and foresight and sometimes it can be down to simple good fortune".

NCB points out, however, that competitive advantage does not last forever and, in this light, attempts to calculate how long each company is likely to hold on to its competitive position.

Starting from a point where an average company with no competitive advantage or disadvantage would have a score of 2.5 and would trade at an average earnings multiple, NCB has found that Ryanair's competitive advantage of 4 is likely to last for 10 years. IAWS's 3.75 is seen as lasting for five, while Bank of Ireland's 3.3 is judged to be safe for nine. Kerry Group's 3.2 is expected to endure for seven-and-a-half years.

Under the "management" heading, NCB finds that CRH, Ryanair, DCC, Kerry Group, IAWS, Anglo Irish Bank and Grafton are possessed of executive teams that offer particular competitive advantage.

ICG does well under location because of its berths on the Dublin/Holyhead route, while locations occupied by Grafton's branch network and the network advantages of Jurys Doyle's Dublin hotels are also noted.

AIB and Bank of Ireland unsurprisingly stand out in the "dominant market share" category, while Kingspan and United Drug also feature, albeit to a lesser extent.

Regulation is seen as helpful for companies such as Fyffes, Greencore and Viridian, all of which are active in industries that limit entry.

On the brand measure, NCB highlights Independent News & Media and Waterford Wedgwood as having some competitive advantage, although the broker expresses some concern at Waterford's position diminishing as market tastes change.