Originally Posted by
Fiordland Moose
You might have the math right but I dont think the logic extends. Sure they are in the same industry and obvious comparables.
Vulcan has a vastly superior business model and management team. Their margins are significantly better, own their own transport fleet, have a better optimised SKU portfolio, fit for purpose overhead structure, vastly superior returns on capital and cashflow profile, are better diversified by geography (australia), and are the momentum player in both markets (undisputedly taking share from STU).
From a CAPM/DCF there are two reasons why Vulcan is likely to always command a premium multiple to STU:
1) higher margins/ROIC/cashflow generation/ and long term growth potential
2) lower risk through better diversification and (in my view) better management team.
Am sure STU a fine investment at this point on the cycle - just cant help but rolling my eyes on any suggestion STU can or should trade at the same multiples at vulcan.