Finally a company on the NZX beatdown list that looks remotely interesting.
If earnings can normalise to anything like the 10 year average you'll have a hell of a result.
Any reasons they won't?
Price to sales prob lowest in history.
FY2022 and FY2023 were probably 'outlier' years in a good way. Beef, lamb and horticulture (the three big pillars of PGW's customer base) all going gangbusters together. i reckon you would have to go back 70 years before farmers had it so good. Take out those two years and you will probably have a better expected 'average' of where things might go in the future. Like all agricultural shares there is some 'weather dependency' here. But, despite these qualifications, I reckon it's a pretty good bet to double your money within two years at today's prices.
The big negative right now is I think cashflow. Farmers just are not spending as they would like. The debt position of the company may need addressing depending on which way the banks interpret their financial covenants. But the position is not catastrophic like Synlait. It just means that some of the money that otherwise may have been directed to dividends may be re-routed to repay bank debt. But the silver lining to that is with the dividend hounds not chasing PGW right now, the share price might take a little longer to recover. Some say that for those wanting to accumulate while the price is low, that might be a good thing!
SNOOPY
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
FY2022 and FY2023 were probably 'outlier' years in a good way. Beef, lamb and horticulture (the three big pillars of PGW's customer base) all going gangbusters together. i reckon you would have to go back 70 years before farmers had it so good. Take out those two years and you will probably have a better expected 'average' of where things might go in the future. Like all agricultural shares there is some 'weather dependency' here. But, despite these qualifications, I reckon it's a pretty good bet to double your money within two years at today's prices.
The big negative right now is I think cashflow. Farmers just are not spending as they would like. The debt position of the company may need addressing depending on which way the banks interpret their financial covenants. But the position is not catastrophic like Synlait. It just means that some of the money that otherwise may have been directed to dividends may be re-routed to repay bank debt. But the silver lining to that is with the dividend hounds not chasing PGW right now, the share price might take a little longer to recover. Some say that for those wanting to accumulate while the price is low, that might be a good thing!
SNOOPY
Agreed agreed,
What do you put the last 12 Months earnings at and what multiple of that is it currently trading at?
What do you put the last 12 Months earnings at and what multiple of that is it currently trading at?
I can't make sense of the quoted PE ratios.
The last twelve months from the most recent reporting date HY2024 (30th December 2023) is actually a composite year (see table below).
Composite Year 2HY2023+ HY2024
FY2023
HY2023
=> 2HY2023 {A}
HY2024 {B}
{A}+{B}
EBITDA
$61.194m
$47.844m
$13.350m
$39.962m
$53.312m
less Depreciation and Amortisation
$28.063m
$13.729m
$14.334m
$14.522m
$28.856m
less Interest Paid
$9.573m
$4.957m
$4.616m
$4.720m
$9.336m
less Tax Paid (Refund)
$6.418m
$8.384m
($1.966m)
$4.789m
$2.823m
equals NPAT
$17.140m
$12.297m
We are looking at 'earnings per share' of: $12.297m / 75.484m = 16.3cps
PGW closed on the market today at $1.62. So I make that an historical PER of 162/16.3 = 9.94
Looking into the (not too far distant) future......
We are looking at 'earnings per share' of: $3.252m / 75.484m = 4.31cps
PGW closed on the market today at $1.62. So I make that a forecast PER of 162/4.31 = 37.6
SNOOPY
Last edited by Snoopy; 16-05-2024 at 10:14 PM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
So what would you call a fair share price based on 37.6 today? I think my simple math over coffee must be wrong. 40 cents? I always liked PGW at a 10% plus return.
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