Originally Posted by
Roger
Hi Mate, I presume you have sold ?
Extremely unlikely in my opinion. Remember as we get toward the bottom of the cycle one can anticipate a dramatic PE expansion, (PE is presently about half its 10 year average). Even if earnings halved from here in future years, (going down to $250m before tax from mid point of current year company forecast $500m before tax for FY17), which I would hasten to add that no broker is forecasting it will get remotely that bad, even out to FY19, AIR's PE at today's price would simply revert to its 10 year average thus we would then have the stock trading at its 10 year average PE at such a deep trough to its earnings logic would suggest it would be very close to the cyclical low.
Logic therefore suggests that we will probably see PE expansion, not price contraction from here if earnings decline somewhat in FY18. I don't think analysts can reliably predict FY18 earnings this far out so their estimates and assumptions should be viewed in the context of how badly wrong they got them for FY17 until the company recently updated them.
On the remote chance we got down to $1.40 I would see that as a very special opportunity...one that only comes along once every few years and make an investment decision accordingly.