Originally Posted by
Arbroath
W69,
I like you're chart. Also agree that profitability is slowly deteriorating across cycles as the factors the company management and you mention have an effect. If they deliver $10m I've no doubt the share price would be c. $2.50 or lower sometime next year. In that scenario they'd still pay out 100% of earnings (balance sheet has no gearing) which would be $0.17cps but that would be a poor investment in anyone's eyes (negative total return).
However, I'm just not prepared to be as bearish as you just yet. HLG management have done a great job over the years, and I note electronic spending was out today with strength driven by spending on hospitality and clothes - the Xmas season is crucial as it is every year. If they can deliver $15m in this environment that would be a strong result and see a dividend of c. $0.25 fully imputed which on $3.30 is a gross yield of 10.5%. They need to deliver 9-10% yields given the industry and all its risks.
Lets put a pint on it - they make $13m+ I win, under $13m you win. I'll still be able to fund the beer as HLG is 8% of my rather concentrated portfolio of 9 stocks....