What's the right PE for a very modest growth rate in eps ?
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Originally Posted by
Joh13
Seems the SP has been hovering around fair value for a while.
Going off analyst forecasts of $64M UNPAT FY2022 / 702m shares = EPS 9.1c x 19 = $1.73
Interesting you choose a forward PE of 19. Last report I read from Forbar had ARV and OCA level pegging around a PE of 14 and SUM with its much faster eps growth since it listed nearly a decade ago on a FY21 PE of 21.
The problem for OCA is the lack of eps growth on a weighted average number of shares on issue, (which is how all the professionals calculate it). Lets assume they can do $64m underlying for FY22 and ignoring new shares issued in the next 12 months from the DRIP that gives us 9.1 cps underlying profit for FY22. Sounds fair enough.
So how does that compare to FY17 when it would have been half a decade since they listed ? In FY17 they made $34m underlying profit but on a weighted average number of shares on issue of just 360.89m shares =9.4 cps. So in half a decade eps has gone backwards by 3%. Hmmm To harsh ? I hear the critics scream because shares issued just prior to the listing distorted the effect of weighted average number of shares on issue in FY17. Okay, lets be generous and look at their first full year of operations as a listed company and we see underlying profit of $52.1m on 610.354m shares on issue giving underlying eps of 8.54 cps in FY18.
If we accept that yardstick as the more appropriate starting point then underlying eps will have grown from 8.54 cps in FY18 to 9.1 cps in FY22 and average annual growth rate of just on ~ 1.5 %
Doesn't really matter whether one uses the first half decade or the 4 year growth rate, growth in underlying eps is ostensibly almost nothing and certainly nothing like the rate at which SUM and RYM grew their underlying earnings per share in the first 4-5 years of their listed existence.
Oh but that's not fair Beagle, you've focused on the period in which the business has transformed its business model and all the gains are going to come once the transformation process is complete, I can almost hear the rebuttal from Maverick sitting on my right shoulder now....but if my memory serves me correctly we were told at the time of listing this transformation process was a 6 year thing and by the conclusion of FY22 we'll be 5 years into this, surely some of the gains should be apparent by now and yet they're not with forecast FY22 underlying eps still being lower in FY22 than FY17 when it listed. Oh dear, surely not. How can I fix this ?, i am not allowed to be a sour Beagle the haters will be all over me telling me off...again.
It's a bit of a curse being a crusty old bean counting mutt that focusing on silly irrelevant things like the real underlying earnings per share. I know, lets look at the headline profit figure including all revaluations and pretend that's the real profit. Hopefully we'll get some super high headline profit on Friday that'll blow us all out of the water and silly things like what's the underlying earnings per share will be something for old fashioned bean counters to muse over and that won't matter because it'll be party time and $1.70 here we come...all the professional analysts say its worth $1.70 so it must be. I should pull my head in and pretend I believe the professional estimations about the future that goes into their DCF models and keep holding my modest parcel of shares and hope everything works out okay.
One good thing, dividend guidance is 50-60% of underlying profit which at the mid point suggests unimputed dividends of 5 cps for FY22 which is an unimputed yield of 3.65% on today's closing price of $1.37.
Quote:
Originally Posted by
Greekwatchdog
Agree as well. Without these Employees's OCA shareholders go nowhere. Sometimes us Shareholders need to remember without the hard work that goes on we get nothing. I for one am happy to see the Workers paid well.
Lovely sentiment but the corollary should not be ignored that without our capital the residents would have nowhere to stay and the workers wouldn't have a job. We're interdependent on each other and all valued stakeholders. Its good we've had strong PE expansion since OCA listed as otherwise we would have gone nowhere. Maybe we'll see further PE expansion if the directors spin us a really good story with Friday's annual result and we could get up to 17 times 9.1 cps = $1.55 again at some point in the next year ? That would be good.
https://www.bing.com/images/search?v...t=0&ajaxserp=0 I should put my rusty old abacus away and think less and hope more. Why worry, be happy !!