Sorry - A bit slow on the come backs
Quote:
Originally Posted by
Roger
Your value is suspiciously close to the consensus broker value of $2.94. If one were to take a cynical view you could say you've lived up to your user name and not been a real tiger at all, no offence intended mate.
But offence taken anyway.
Look out your window - do you actually remember having an orange and black striped lawn ornament before?
Quote:
Originally Posted by
Roger
Thing is you're right in some respects. Its a low margin high turnover business so future profit projections can vary wildly depending upon what assumptions analysts model into their DCF valuation.
Buying those new plastic airplanes has really eaten up the free cash flow and will do so to a lesser degree over the next few years.
Quote:
Originally Posted by
Roger
I have a view that N.Z. analysts are being excessively conservative with FY17 and FY18 estimates and accordingly believe the stock is mispriced. Essentially N.Z. analysts are calling FY16 EPS the peak of the cycle based on low oil prices and a strong economy (go figure on the latter point).
Its interesting to compare consensus broker forecasts for the years ahead for AIR and QAN (QAN in brackets) All information off 4 traders
FY15 Actual 29.1 (25.4)
FY16 Forecast 44.8 (52.5)
FY17 Forecast 36.9 (52.4)
FY18 Forecast 33.8 (59.8)
Note the big sea change difference between these forecasts in the latter two years for two fairly closely related commodity based economies and airlines operating in a similar region.
Analysts for QAN are not pricing in this as the peak of the cycle and are saying that notwithstanding the prospect for cheap oil to be a temporary matter, QAN with its older less fuel efficient fleet will increase earnings going forward.
On the other hand AIR with its more fuel efficient fleet and despite wearing the first year costs of establishing new routes to Houston and South America this year will materially decrease earnings going forward and notwithstanding the economy presently weak they are saying this is the peak of the cycle.
Qantas and Air New Zealand are different airlines in different stages and to necessarily expect there results to be in lockstep would be 'misguided'.
Quote:
Originally Posted by
Roger
I put it to you my friend and others that none of these analysts would have the foggiest clue what either of these airlines will make in FY18 and further out so their DCF models are just absolute guesswork and therefore almost meaningless.
This is, to a degree, true of all educated guesses on any company and your guess hopefully is actually better than theirs.
Though it might not be.
Quote:
Originally Posted by
Roger
For what its worth consensus broker valuation for AIR is $2.94 and QAN $4.47.
I think its simply a case of removing the net effect of the present oil price tailwind, (I say net effect because other airlines are discounting airfares so AIR won't get the full circa $280m worth by any stretch of the imagination), and apply a 10 year average PE to the airline of your choice.
...
The question would be to apply the 10 year average PE to what?
The 10 year average of 'real' earnings?
Best Wishes
Paper Tiger