Originally Posted by
winner69
For years the Skellerup share price languished in the 100-150 range - should always be worth more was the cry. In 2017 it became more popular and the share price managed to get to 200 odd in 2020.
All those years Skellerup wasn't really a dog (financially) - it was just they disappointed punters with lack of growth and things like that.
Skellerup has always had a pretty good ROE (like 14% to 16% through 2016 to 2020. More importantly they have for a long period of time covered their cost of capital - ie they have created economic value.
Since they really got things sorted big time over the last few years their ROE has improved to 23.5% this year and their ROIC (Return on Invested Capital) has improved nearly 20% (was 10%/11% 5 years ago)
Investors love a high ROIC company - like professional investment managers (not guru broker analyst types) often value a company on this basis - using a thing called Market Value Added (Difference between Market Cap and Equity) which essentially is the NPV of future excessive returns (where excessive returns are those in excess of its cost of capital)
I love chart below - it highlights how much Skellerup has been rewarded because of its growing ROIC.
Pretty incredible eh - like $1.08 of shareholder equity is now valued by the market at $5.82 - Market Value added of $4.74 (probably even more tomorrow)