You gotta wonder alright
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You gotta wonder alright
Suppose share price up 1.2% post announcement is pretty good (Wed close to today close)
Better than going backwards
FWIW Marketscreener activity last couple of days
of 8 analysts 5 unchanged and 3 upgrades to target
Average now $30.82 (was $29.99) and range $23.50 to $38.00 (was $22.65 to $37.00)
As usual for guru analysts consensus target price generally follows the share price - like consensus still less than back in Feb/April, a bit ike the share price ;)
Consensus is an interesting study - consensus is usually wrong and the more passionate people are about a subject the more likely consensus is wrong. Although consensus is a good thing it’s just that the world is far more complex and unpredictable than the consensus normally allows for, so be careful.
George Friedman good read on this, esp from an economics and geopolitical view.
How do FPH prospects look in light of the market panic over the new omicron variant?
They may sell a few more ventilators although I gather the market is fairly saturated. Possibly full covid wards will limited access to hospitals for other sales???
I checked ResMed share price and it was down slightly but appears to have regained that in post market so it’s about the same
New variant, great results, looks like Monday could be a nice day for F&P unless people start panicking then who knows
Markets including our tanked due to new variant worries but why FPH got sold ...no one knows ...is it just sell stocks or lack of thinking or depth of our markets ?
US and Europe were big downs but they had the intelligence to buy Pfizer and Moderna up 6.5% and 20% respectively as covid beneficiaries
Our brokers and advisors are more busy talking down FPH saying covid almost over so FPH revenues under threat ...seems more like conspiracy ...lol
FPH results beat market consensus big time , NZD at new lows of recent times , Bonds yields down big time , New Variant big concerns , Europe in severe covid wave , etc etc ...Still our brokers and analysts including media busy downplaying FPH stock
I am not very convinced that all being revealed at the moment about FPH is coming from real future fundamentals ...all seem have some hidden agenda too
This was my thinking, I would expect some sort of sell-off, but later rally around to the fact F&P is doing well and is a good contributor to current events
Sales growth stopped / sales expected to decline over next couple of years / trading on a PE over 37 / high PE for a no growth company /share price seems to be trending down
Just a few casual observations
Wouldn't surprise me if we got a few posts warning punters to get out ..... echos of last year when a high growth market darling started reporting lack of growth ..... and ending the warning with something like 'I could get interested in FPH at $20'
History might repeat itself ....one never knows
PS - to me (visually anyway) the share price does seem to be trending down ...but I suppose everybody sees things differently
I actually dont subscribe to W69 views ...FY 18 NP $ 190 M. , FY 19 NP $ 209 M , FY 20 NP $ 287 M , FY 21 NP $ 524 ....
After such high growth last two years ...it needs to consolidate its earnings called normalisation of earnings ...in such periods companies do not grow but consolidates
Analysts are expecting this period to last till 2023 ...but most likely it will be sooner then that ...In such period companies still command growth PE as they will eventually return to growth path after this need to consolidate above trend recent growth
If FPH was actually predicting 80% growth year after year then it would be trading at internet company PE of 150 ...but its trend growth is 20% EPS growth so it trading at 45 PE keeping in view industry average and company balance sheet is very fair
Last two years it did 37 % and 83% YOY eps growth and now it will consolidate for 2-3 years to return to its trend growth of 20% YOY ...in this time it will continue to command PE of 45 forward .
On that basis FY 22 market consensus of 63 Cents eps brought it to fair value of $ 30 ...which is now upgraded of 69 Cents ...so fair value at present should be $ 33 ...actuals maybe 90 Cents ...
As there is too much uncertainty about Covid and how long it will last ...many FPH analysts had called an end to covid last Nov on vaccine discovery ...but even after one year its not only here but still booming ...
Also people keep forgetting that FPH was not setup to fight Covid ...it has Respiratory medical devices business which was always doing well even before Covid so safe to assume even if Covid vanishes overnight ...FPH will still be doing ok .
After recent HY results we have seen how it outperformed analysts estimates during a lull time of Covid ...so I will not underestimate FPH prospects ahead ..all versions of time scales .
FPH management is known to be most conservative forecasters ...they have track record of always exceeding their guidances as market has full faith in their future predictions .
They are predicting that they will. be needing 5 factories more in next 5 years for which they are going to spend $ 700 Mil ...I am sure many in market will pay attention to such medium term bullish outlook and its not based just on Covid lasting that long
Lister puts this down to the fact there simply hasn't been as much optimism pumped into the market in the past year, but also because some of our biggest players aren't as sensitive to the economic impact of lockdowns and travel restrictions.
He points to the Spark, Chorus and electricity companies Mercury and Meridian as examples of businesses that should hold steady as the market digests the impact of the Omicron variant.
Fisher & Paykel Healthcare could, in fact, see an increase in investment in the coming days.
"Money will move to safer stocks during this period of uncertainty," he says.
Close at 33.33 up 33 for the day
Must be a good omen in all those 3’s
Share price up 3% today
Pretty good day
Covid taking off around the world again.
hey alokdhir .... Stas NZ say respiratory equipment exports down $51m or 41% in November on pcp
Whats yours / Forbar's model say re sales now
OK - I guess that's not so good, then. On the other hand - analysts predicted a revenue downturn for FPH anyway after the stellar Corona peak - i.e. just a healthy breather?
On the bright side ... if health services buy less respiratory equipment .... this might be a really good indicator for experts expecting Covid to peter out now? On the other hand ... this all must have been before Omicron raised its ugly head ... so - not quite sure what I am supposed to hope for from here? I seem to have a conflict of interest :):
Discl: holding FPG but still hoping for Covid to go away.
Yes ..last Nov was a big month for them ...this Nov its almost similar to current Sept and Oct ...estimated revenues are $ 155 Mil for Nov month compared to $ 210 Mil for Nov 2020 .
Also will like to highlight here that almost 100% devices are exported from NZ while consumables are big from Mexico ...so these days it seems more consumables are being produced and sold then devices so less exports from NZ and more from Mexico thus changing the correlation a bit from month to month depending upon the mix of Devices to consumables .
In 2020 last qtr of Oct to Dec devices exports from NZ were unprecedented so NZ exports of this year is looking down a lot but I am pretty sure its just the change of the mix which is showing such big drops on Nz exports figures .
My estimate for current year revenues at present are $ 1900 Mil with $ 480 Mil as NP ...translating to 83 Cents eps ...so even if u discount it on 40 forward P/E then current fair value is about $ 33-34 ...though normally a company of FPH quality should get 45-50 forward p/e
Also will like to highlight here that almost 100% devices are exported from NZ while consumables are big from Mexico ...so these days it seems more consumables are being produced and sold then devices so less exports from NZ and more from Mexico thus changing the correlation a bit from month to month depending upon the mix of Devices to consumables .
This is probably why the FB model was quite a bit out. Ultimately with F&P what counts going forwards is consumable sales - hardware sales are just a means to this end (you cant sell consumables unless you have the hardware in hospitals.....) - this is where COVID has been such a boost for them, the availability of F&P hardware in hospitals is now much better (although for Optiflow is still only a small % of the potential market).
The recent announcement of 4 new factories is primarily about having more capacity/redundancy/reduced transport costs for the consumables not about increasing hardware manufacturing capacity in my view.
One point that hasn't been discussed is that this increases their Moat - in their main hospital product areas (ventilation circuits/humidification systems and oxygen therapy (Optiflow)) you are locked in to a single manufacturer for consumables once you have their hardware. This is much less so in the home OSA market where a bit of mixing & matching happens.
I suspect both Alokdhir and FB will adjust heir models to take account of changing product mixes (or maybe F&P could just issue more regular sales updates???)
Somebody showed me this chart a few months ago …..Australia Healthcare valuations ….PB v ROE……Market gives higher multiples for higher ROE ….I was lead to believe FPH is the top right point.
fPH ROE has improved a bit since then (about 35%) …current Price Book ratio is 12 …..so maybe on this basis $33 is ‘cheapish’
Interesting eh
Alokdhir …such an analysis does not support your wish of PE of 45 to 50
I was just talking about its historic valuations ...its average p/e since 2013 is about 47 ...on that basis 40-45 seems reasonable ...but just a estimate ...
Also for a company with cash positive and 0 debt balance sheet working in niche healthcare sector with good Moat in hospital equipment ...
I am pretty sure FPH will do pretty well ahead too ...
I have worked at the local hospital for 22yrs, and FPH are great people to work with , Reps are very helpful and informed, .... and hardware is just like an inkjet printer, buy the printer and your locked into the cartridges for life of the printer.
Merry Chritmas to all ..
Great thougths from all .
Thanks so much for all sharing your oppinions over the years .
Hamilton Hinden Green have put FPH in their Brokers Tips selections for 2022 - the only broker to have included FPH in their five picks ...hmmm
Maybe they thought FPH couldn't have two negative years in a row .... a bit like hoping the dogs one year will be the star the following.
But I reckon HHG will be disappointed at years end picking a stock whose price goes backward again
The Economist has a table that says NZ property trades at a price to earnings (rent) ratio of 100x. That would make it an incredibly bad investment unless you're expecting a significant jump in rental income going forward.
Suppose that makes FPH on a price to earnings ratio of about 45 cheap as ... really cheap
Yeah - the economist article was interesting…showed NZ’s property market has grown to be the most expensive / prices have grown the fastest on every metric they looked at - in the world (or at least the ones that they looked at). Bargains galore when that is your baseline.
5m covid cases last week.
2022 will be a tough year with rates increases and inflation.
FPH is one of my picks for 2022 and I am very happy to have money in this proven blue chip stock.
Hi winner(or anyone else), would you be able to post the broker picks for CY22 if you have those to hand. Perhaps in th stockpicking competition thread. Many thanks.
2021 Results
Attachment 13356
2022 Picks
Attachment 13357
I see Shareclarity has a DCF value for FPH of $23.06
Thought i'd update my DCF for FPH which I did a few years ago.
It came out at $34.23
First run run through came out $24.68 so I boosted sales growth assumptions, kept margin improvement going longer, upped the long term growth rate for terminal value calcs and turning a blind eye to the significant capex they talk about ....and lowered the discount rate ....after all that it came out at the $34.23. Cool eh
After all that I can't bring myself to increase my exposure to FPH. Suppose I'll be the loser out of that decision.
Then went back to the sign off I use ...... basically says justify to yourself high valuations you are sort of justifying to yourself that future returns will be on the low side....or maybe negative
Thanks for posting your DCF and comments Winner. I'm a long term Belieber (is that phrase still a thing!) in FPH. I read alot of Alokhdir posts and nod in consensus and enjoy your views/responses.
I am wondering (with some interest) if there is some form of 'Wedge' forming on the chart, with a breakout (up or down?) imminent (I am no chartist at all, so high speculation!) The down trend (from $37) and then the up-trend (from $27) seem to be converging around $32/33....
In english, maybe Mr Market is considering that the effects of COVID and related variants are here to stay, hence re-rating FPHs foothold and ongoing increase of their consumables.
I guess this is the problem with all forward looking valuations (like DCF) ... they are based on assumptions which may or may not be right. To be honest - normally they are wrong.
If I look back at my work (where part of my job was to plan rather complex projects - involving decades of person years ;) ) ... while I completed many projects as judged by customers and company as successful, none I can remember ended in terms of requirements, timeframe and resource allocation aligned with the initial plan. How could they? Every time we started to develop something, both customers and we learned more about the requirements ... and so they changed. And this is just looking at individual projects.
FPH is running multiple complex projects ... and on top of that highly complex factories. Neither demand nor supply is predictable (just look what Covid did, and nobody knows the next move of the competition). Nobody has an answer to questions like:
How is Covid going to develop and what impact will this have on FPH's sales?
When is the next pandemic starting and which impact will this have on FPH's sales?
Does any of FPH's competitors have better or comparable equipment they are going to release next year?
What political pressure will impact on FPH's sales next year or in the years after (e.g. a Trump Mach 2 might again play with import tariffs or close the borders to products from where ever).
Which means the best one can do is to look into history and assume things might go as they did so far, or they might go either better or worse. DCF values might be interesting if they show you what the market currently thinks, or they may be useful to measure how hard a company has to work to deserve the current market valuation ... but they are clearly not a reliable measure how much a company is worth. Nobody knows.
Having said that .... FPH looked every time expensive I looked at them over the last two decades or so ... even when we could buy them for something like $1.20 in April 2000. My goodness - this is a CAGR of 16% for the last two decades ... and they paid on top of that some dividends, didn't they?
Seems to be one of these shares where the benefit of hindsight makes the difference for the purchase decision.
Discl: Holding some, but in with the benefit of hindsight not enough ... and I am pretty sure I will say the same thing next year and the year after that :p;
In a recent FPH presentation they had a slide that showed the 'addressable market' was $20 billion. FPH current revenues about $2 billion
My DCF (the $34.25 one) has revenues in 2030 as nearly $10 billion ..... goodness gracious me
Care to share some of those variables winner? I like the train of thought of how hard they have to paddle to maintain the current valuation.
@BP: it's not a case of forecasts normally being wrong - IMO they are always incorrect, it's just a case of by how much.
OK Ferg
I've revisited revenue assumptions and come up with some 'realistic' forecasts. These being flat in F22 and then returning to much the past trajectory. Gives about 11% pa growth over the next 10 years.
Assumed margins returning to 66% of sales and assumed realistic expense increases. Reality check is EBITDA margin increasing from 40% of sales to 44% ...hmmm. Ongoing capex as guided by FPH. Discount rate 8.5%.
For what its worth that gives a DCF value $28.34
Chart shows assumed sales trajectory over the next 10 years
I'm still can't justify increasing my exposure to FPH at current prices .... just keeping a close watch on squiggly lines on the chart to tell me when I should be selling some (or all)
All this a a load of codswallop eh .... but sort of shows how good FPH has to perform over many years to justify current share price
Dont forget what my signature means
Thanks winner. I definitely have not forgotten your signature!
I interpreted your earlier post (about changing variables to justify the DCF) as being somewhat tongue in cheek given your dry wit. But it is still a serious topic nonetheless.
Some might say the current SP is "priced for growth" - and I would add the caveat of being over and above realistic/historic growth rates. That said, you will find the DCF is highly sensitive to the discount rate - but I expect you already know that.
Thanks for sharing!
What does the DCF model say if the terminal value is set to 40 or 50?
Actually don’t worry
Good work Winner. I'm in your camp - I don't see value anywhere near the current share price. FPH and RYM in particular are why I don't want to buy ETF's of the NZ market when money comes in that I want to put to work.
Call me crazy but I can't help but seeing revenue and more importantly NPAT falling from the current peak. When those results are showing reasonable double digit decreases on the prior corresponding period I think that will be a big catalyst for SP falls.
I saw a scatter plot of forward PE's and 2 year EPS's cagrs and FPH was off the scale expensive.
With hospitalisations reaching past last year's peak and rising ...I think rates vs new waves is trying a duel for SP ...its becoming another bumper half year for FPH ...maybe coming back of big boys will put some life back in SP
NZD and phenomenal covid wave world over are positives with rising rates on other side of sea saw ...still feel SP will improve soon !!
ATTENTION PLEASE - URGENT
BUYING TIME - think FPH share price has gone below EMA400
Need to act quick as generally doesn't stay below that line for long
support is 2970.
only just below the 180 at the mo.
Correct me if I an incorrect in my reasoning winner69!! :)
I think in your earlier posts on this thread you had mentioned that your calculated FPH DCF value $28.34 and risk' per se is managed through a safety margin.... (geez.... talk of being cheeky! :D)
I am guessing to take up a longer term position with that safety of margin the SP might need to decline a tad more..... thanks for the heads up and informative posts....:t_up:
Full conviction buying time ....IMHO ...lucky to get it around these levels ...but TBH it keeps coming here every 2-3 months ...as sentiment and valuations are not that flash at the moment ...
Hope there's a market update imminently like last year (22nd Jan).Interest rates rising means future cash flows discounted more for these high pe stocks is what I'm trying to get a handle on.
NZD:USD down to 0.67
Wasn’t that long it was heading to the mid 70s
That’s good FPH
Aged care sold off for Omicron fear ...FPH sold off for rates and inflation fears ...No place to hide in the market ...lol ...Even low NZD not helping at the moment
What about an EPS over last years ? Will it help W69 ?
With ongoing construction of infrastructure in Auckland I am optimistic of FPH maintaining forward momentum
winner69 - Yep, entered FPH nearby your calculated DCF today..... lets see how the market handles and if the SP reaches the DCF value......
FPH is exactly following Nasdaq downtrend in %age ...so looks like another down day on Monday ...May reach its last bottom of $ 27 in few days ...Unless company says something positive in trading update expected next week ...:ohmy:
@alokdhir - Thanks!! indeed FPH is following the Nasdaq downtrend ... didnt quite connect as thought this was more of a manufacturing company and not Tech ... but yeah from the looks of the nasdaq
declining & Omicron etc it will go to 28~ at least..
@winner69 - Thanks!! guess I thought it would bounce back faster but unlikely given nasdaq falling and omicron... should have kept a bigger margin of safety at 27-28~!
Anyways will see how it goes in tommorows trading....
Very soon market will realise ...selling FPH is not a very wise move ...lol
NZD will drop on record current account deficit due to tourist & foreign students dollars missing ...Exports need pick up the slack...for that NZD need drop to around 60 cents levels
" The annual current account deficit was $15.9 billion in the year ended 30 September 2021 (4.6 percent of GDP), $13.5 billion wider than the year ended 30 September 2020. The largest annual current account deficit prior to this was $14.7 billion (7.8 percent of GDP) in the year ended 31 December 2008, during the 2007–2009 global financial crisis.The change in the goods balance from a $2.0 billion surplus in the year ended 30 September 2020 to a $3.8 billion deficit in the year ended 30 September 2021, and the change in the services balance from a $2.7 billion surplus to a $4.3 billion deficit, over the same period, were the biggest drivers of change to the annual current account."
@alokdhir - Very well explained :t_up: (the current NZ account deficit) ...The NZD looks weaker each day vs USD moving from .71 -->.671
Have been looking to convert some NZD into USD to diversify & invest in declining US stocks for the long term.... but each day the NZD is looking weaker and perhaps the USD is also gaining strength...
Say if someone was trying to invest 50K NZD(FIF limit) they would earlier get 35+K USD and now they get 33.5K USD and going lower....
Just when the correction in US markets begun :eek2:.... (bite the bullet or Smartshare-like ETFs)... well thats life! :)
Anyway FPH results\updates should be good...whether if that reflects in the SP might be another thing I wouldn't know....;).....
Cheers!
FPH share price has made very little sense since Aug 2020. Prior to COVID having any impact it was sitting in the low-mid $20s. Since then we have had a global respiratory disease pandemic that has given them almost unlimited free advertising and boosted their growth by "at least 3 years" - in their words (and they have a consistent track record of about 15% YoY growth). Yet the SP has risen about 20-30% (depending on your exact starting point) which is less than the US indices (and F&P is essentially a US company from a revenue growth perspective (it is already the dominant player in NZ/Oz).
Its products are in no way COVID-specific, it has virtually no debt, a huge history of achievement and one of the best management teams around - but is unloved by the market and is currently being considered as a high-risk tech stock.....go figure.
NZ Inc may be heading for the ****ter according to many posts here (and I don't necessarily disagree) - but FPH (with MFT) are still a good way to get exposure to overseas economic conditions without holding foreign shares (with all the tax implications of that).
Perhaps the issue is that FPH is seen as too good a stock for traders at the moment and with a yield of 1-2% you need a 5yr+ horizon in the current interest rate enviroment?
Huge 3% plus swing this morning ...up of course
Mkt is discounting future cashflows now that int rates are rising hence high PE stocks on a downward cycle.
When FPH was trading at P/E of 50 at that time OCR was 4% ....so its not that simple to justify SP of FPH ...but its sentiment and valuations are at lowest ebb it has ever been ...What goes down will come up if u are a patient investor .
Today maybe bounce day for it as it went downhill much sooner then other blue chips .
Jeez ..if NZD goes sub 60 that’ll be significant for FPH earnings
Huge tailwinds
Alokdhir …any idea how many zillions say a 5 cent drop impacts bottom line
I have read it here in some post that every cent down adds about $ 5 million to bottom line ...so 7 cents should add $ 35 million so roughly 5-8% EPS growth ...
Also at that time when that post was written ...maybe 1.5 years back ...sales were much lower then now ...so rough estimate maybe every 1 % NZD drop should add 1 % to EPS .
At present due to OMICRON not effecting lungs that much ...most analysts are thinking no respiratory support needed in hospitals for Covid patients thus FPH equipment not being utilised as before ...its much less then Delta times ...but data from South African Covid Hospital portal ( Its most informative portal providing complete covid hospitalisation details including numbers of oxygen and ventilation support out of total numbers in hospitals ) shows its roughly 17.5 % hospital patients still need respiratory support . So I am pretty sure FPH equipment is being used and they will be doing alright ahead too . Delta is not totally gone but Omicron by its sheer numbers is in limelight .
https://www.nicd.ac.za/diseases-a-z-...datcov-report/
We will get some idea about December exports from Stats NZ on 26th morning ....though now estimations going awry recently ..lol
Even if omicron causes 1/5 of the hospitalisations as the other variants, the exponential nature of viruses mean that without ironclad restrictions on transmission we will still see a great deal of hospitalisations. Certainly doesn't help that public fear is significantly lower now. Do not discount omicron, or worse, discount what comes next. That applies to more than just FPH stock. Viruses tend to become more contagious and less severe over time, but the random nature of mutation means we could face a more severe more contagious strain.
Many factors effecting SP of FPH ...Rising rates and market sentiment on downside due its high valuations ....Covid situation and falling NZD on upside ...
On balance I think it will be staying in $ 28 - $ 32 range only ...hopefully
Fisher & Paykel Healthcare (F&P) delivered against the backdrop of
a weak local equity market. The company reported a strong first half result, ahead of expectations, boosted by another wave of COVID hospitalisations in the US, Asia, and certain countries in Europe. The bulk of the strength was in sales of new hardware in the Hospital division, which continues to grow the installed base of F&P products in both established and new customers (70% of hardware sales were outside of the core markets of US/Europe).
There is increasing weight of evidence to suggest that nasal high flow (key product) usage will structurally increase even as COVID wanes. This is because (1) the therapy has stood up in a crisis and doctors who are new to the products have now had first-hand experience in seeing its efficacy; (2) there is a still sharply growing installed base of F&P hardware;
(3) clinical evidence is supportive; (4) F&P is increasing its sales force
to provide education to recent adopters and increase consumable usage. Market expectations do not appear to factor this in, as medium- term forecasts remain in line with the pre COVID trajectory and imply meaningful under-utilisation of the much higher installed hardware base.
From KFL newsletter ....they are expecting higher growth ahead in medium term due to positive effects of Covid experiences of hospitals and doctors and patients
Overseas merchandise trade: December 2021
First time Stats NZ could not release this data on time ...it was supposed to be released on 26th Jan ...but for some reasons got delayed to 1st Feb ...maybe FPH exports overwhelmed them ...lol
29 gone .... timber another very high pe stock
but in your search look for companies in a high inflation environment that have pricing power ie they can raise there prices without effecting demand and they can absorb the costs for there product or service. most companies cannot do this and higher wages , materials shipping and energy costs will eat away there profits in a high inflation environment
Big spike in share price at open on Monday on NZX (based on ASX close)
@BlackPeter - Thanks BlackPeter! So true... Indeed.. there is a fee for 'waiting on the sidelines' Had recently cashed out of the stocks I had recently bought as I realized that I had very little margin of safety for my investments, wanted to protect my capital, the markets was in a downturn and would soon expose my cost prices.. Its been a learning curve... But yes your right purchasing power of NZD has reduced e.g. NZD:USD = .71 -->.65 , NZD:AUD .96 --> .935 (In order to invest in US or Oz shares) Suspect it will be a rollercoaster ride this year....
@ winner69 - Yep, should spike up on Monday given the ASX and US end of week closes. However remains to see if after the bounce back it then gradually drift down lower in the days to come till the results or any positive newsflow occurs...
@alokdhir - Thanks Alokdhir! for all the inputs. Should do some research on them and try to keep them (mix of value & growth picks)on my radar for buying opportunity on dips ...
I find it helpful to ask myself at times like this, when there could be an urge to sell, whether the company I invested in has fundamentally changed since I last bought shares in it. If not, why sell ? Unless you are a trader of course.
Based on that, I see absolutely no reason to sell my FPH shares. I'm much more likely to increase my holding than I am to reduce it.
@iceman - Hi Iceman that is correct there is no reason to sell FPH shares and would increase your holdings in a downturn if nothing has really changed with the business.... However the caveat being a lot of people would have bought it earlier when it was in low 20's and had a margin of safety. In my case being a newbie my recent purchase point has always been above 31-32 which didnt offer much margin of safety in terms of DCF, price. If one knows that it would go below those levels. e.g. 28 it wouldn't make sense to hold on when you could increase your holdings for more shares by buying at a lower price...
Just brought up a 2 year chart of FPH, something anyone can do for themselves so I won't bother to post an image.
To me it looks like FPH, subject to fairly wide oscillations around the trend, has been in a downtrend since Sept 2020 when it hit nearly $38.
There's a clear breakdown through the key 200 day moving average indicator.
On a PE of 31.
No question this has enjoyed MASSIVE tailwinds from Covid but this seems to have peaked in late 2020 and a reversion to earnings not artificially boosted by this pandemic would appear to be another concern in the medium term.
I see no logical reason to apply fresh capital here and I think high PE stocks that have been fueled by once in a hundred year near zero long term interest rates (10 year N.Z. stock got well down under 1% in late 2020 but could be back to normal level's of 4% late this year or next) are vulnerable here. My 2 cents on this one.
They have -27% gearing and their market is certainly not consumer discretionary so they are not likely to be much affected by increasing interest rates? Also, they are getting tail-winds from the falling NZ dollar and should be a defensive NZ share in this environment. They have been a great trading stock over the last few months and are always a great long-term hold. I certainly wouldn't rate them a sell but you would want to be cautious buying anything at this point.
I don't follow this one mate but its important to understand that I am not talking about interest rates as it affects consumers, rather the 10 year Govt stock rate that affects the DCF valuation of the company. As long term interest rates increase the current value of future growth gets marked back as investors demand a better price for a company now to compensate for higher rates and future growth is generally worth less in today's dollar terms.
https://www.marketscreener.com/quote...30/financials/
I think its well worth noting that last years result of 90 cps is regarded as the peak and the average analyst is projecting just 71, 67 and 78 cents respectively in the next 3 years.
At $28 this puts FPH on a forward prospective PE of 39 times FY22's forecasted result and 42 times FY23's result.
Those are very very expensive metrics for a company that has just experienced peak earnings and is still enjoying very strong tailwinds from Covid The yield of 1.39% is well below the 10 year risk free Govt stock rate which is now over 2.6%.
I think FPH is very vulnerable to the downtrend continuing. For those that believe the worst of the pandemic is behind us, (I am not sure I am in than camp or not) this looks like a pretty good short opportunity to me.
Despite all this, this stock is well covered by 9 analysts which is very good coverage for a N.Z. stock, who undoubtedly know more about it than I do and the average price target is $31.71 so you should take my comments with the grain of salt they probably deserve.
For me. I don't believe super high PE's in near term earnings decline will work best in this environment...but like all things, time will tell.
Hope my friend Couta1 reads this post. Consider it a warning mate, I really don't like these metrics and the trend down is not your friend.
I did a DCF valuation with pretty bullish growth assumptions not that long ago ....as I posted that came in at about $28
If I increased the discount rate by 1% point (and kept the growth assumptions the same) the DCF is about $4 lower - about $24
Increase the discount rate by a further 1% point and the DCF is about another $4 lower - about $20
Nothing changed except the discount rate - all the bullish growth assumptions remained the same .... just pointing out the sensitivity of discount rates on valuations .... like Beagle alluded to
Doesn't matter much because the collective knowledge of 9 guru analysts can't be wrong with an average of $31.71 can it ..... but then again one of the gurus came in at $23.50 ... must be an outlier
Yep the high was $37.89 on Aug 28 2020 ... and has essentially been in a downtrend since
What's really spooky is that late August 2020 was when ATM peaked and started heading south
So market sentiment at that time affected the high flyers
Spooky eh ..... be a bit messy if FPH started a series of not so optimistic announcements ...one never knows