Time for an objective look at the eps growth slowdown
Been a truly fascinating study in human psychology these last few weeks just observing this thread.
We've had all the expected phycological behaviors from long term holders and those with a very heavy exposure.
Talk of it being bargain basement is expected and totally misplaced in my opinion and appears to lack any recognition that the growth rate has dramatically slowed.
https://www.marketscreener.com/quote...22/financials/
Forward PE at the current price is 27 and is most certainly not cheap considering the current outlook for the year ahead is for ostensibly no earnings growth !
That's right, the average analyst estimate is for 53 cps up just 1 cent from last year's 52 cents.
This is predicated on a massive second half rebound in sales with the company itself expecting sales of $750m in the first half and a massive 47% more at $1,100m in the second half. WOW - Good luck with that !
The potential for the impact of Covid to linger into the second half and potentially beyond that should be clear enough. Even if this very lofty target for second half sales is met there is still ostensibly no earnings growth in the current year. What should be crystal clear is the growth rate is slowing.
Eps for the last 5 years is FY16 4.4 cps, FY17 12.7 cps, FY18 26cps, FY19 39 cps and FY20 52 cps. This gives a CAGR of just over 60% for the last 5 years, very impressive.
What are the analysts projecting for the next 3 years ? An average growth rate of 15%, very different to what the company has enjoyed in the past and certainly nowhere near as impressive so some PE contraction is definitely to be expected !
If 2H sales don't rebound as strongly as the company is expecting shareholders can expect a strong share price reaction. Its going to be a fascinating year. If there are more excuses coming and more downgrades (downgrades usually come in 3's as Balance alludes too and I agree) there's trouble ahead as sure as night follows day. Lets get real here, the geopolitical and competitive environment has changed in the last couple of years. Its clear to me some people are in complete denial about that.
Its a little sad to note that basic TA like selling when it broke down through the 100 day MA would have got shareholders out at ~ $20.
Disc: Its an extremely rare day I ever buy in a confirmed downtrend, and then only on truly compelling value, (not the case here in my opinion), so I continue to keep my powder dry and will await a confirmed bottom being put into the share price and the emergence of the beginnings of a new uptrend.
Just thought I would update my thoughts. I'll go back to being on holiday from this thread and continue my fascinating study into human psychology. This I am sure will include some strong and possibly derisory rebuttal's to this post.