VGL, HLG, AIR to name another 3.
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Relax, SailorRob.
STU is a turnaround story (with the usual hiccups along the way) and turnaround stories do take time to regain credibility and for their sp to reflect fundamentals.
Have a look at Comvita - it was stuck in a trading range for much of this year despite one profit upgrade after another, and finally it popped today on confirmation that its reset strategy is well and truly bearing fruit.
With STU, it is very telling that the CEO has been buying shares (last one being in May this year) at around current levels.
STU’s flaws will be further pronounced once Vulcan lists and the huge difference in financial performance are exposed. I wonder if STU have too many SKUs ehich reduces scale and profitability. Trying to be all things to many not always the soundest strategy
Not sure what you're on about Balance.
Having a basic understanding of simple math I'd much prefer the share price to absolutly tank. I don't want it rising to fair value as I'd have to sell.
Longer it trades here the better.
CEO Share purchases not very compelling. Tint fraction of net worth and purchased none when he should have durig 2020.
I already have a large position in Stu but at the current price I’m tempted to buy more.
Doing my best to 'fall in love' with STU .... but finding it difficult, at least from an operational point of view
In spite of years of talking about transforming the business and becoming heaps more operationally efficient many key indicators aren't improving and are in most cases are still worse than they were a few years ago
Gross margin improvement for instance comes through as top of mind. They even say staff incentives are based on gross margin growth rather than sales growth (jeez I made that happen in one place 20 plus years ago).
These charts from the results preso are a worry.
The tonnage / sales chart shows that average selling prices aren't improving - infrastructure seems the problem here
The Gross Margin chart shows margins aren't really improving with 2H21 % less than 1H20. Hardly inspiring and doesn't tie in with the glowing commentary. What's also worry that current GM% is still significantly less than 25% achieved a few years ago.
At lest they put in charts that don't look that good - must give them credit for be transparent.
Besides margins they talk about great working capital management - on the 5 year summary table they show a line Working Capital (times) whih is the number of turns per year. A woeful 2.8 times in F21 when ia few years ago it was well over 4 times - hardling inspiring and again at odds with the commentary over the last few years
Never mind - I can't see myself falling in love with STU (from a company operational point of view) but from a share trading point of view there is (as Rob points out) still potential of good returns if that $27m in cash ends up in shareholders hands somehow and the market re-rates accordingly - F22 might be that year (just like 22 is going to be the Warriors year). However I shouldn't forget that shares are often 'cheap' for a reason and being 'cheap' could be because they are slow growing low margin company with pathetic returns on capital
So currently it's generating a ex cash unlevered yield of 10% which I don't consider great compared to other opportunities.
I'd prefer a 15% return which is why I'd like to see the price come down, then any money I invest from my own funds, from STU dividends and most importantly from any buybacks they do, will be invested at a much higher rate of return then present.
At current price I would potentially re invest dividends but probably not.
A one off return generated by the price rising to $1.50 and selling is much less attractive than the opportunity to re invest at a 15% unlevered yield, I could also then add my own leverage if I wanted.