This meeting was to present our findings on ARB
Attendees
Thanks to Mark Justin for attending and Roy for sending in analysis (despite not being able to attend as he was in the UK.
Findings
Our analysis varied in values from $3.30 to $17 most of the reason for the difference was around the margin of safety we employed. Both Justin and Paul missed the high level of debt (%35 of total assets) from looking at the figures from commsec. Mark has calculated a more accurate earnings figure by basing his figures on a free cash flow. Mark and Paul got earnings growth at around 35%. Justin was around 8%.
Spreadsheet of our analysis can be found here
Tasks for next meeting
We will all analyse another very interesting company called SDI which is a dental company that has been hammered recently on the share price. Go Forth and Value!
For everyone could we please base our valuations on beating a 12% bank return. Roy asked me to do this so the valuations can be more easily compared
Comment emailed by Roy
ReplyDelete33% debt level? 33% of what? Cash reserves / earnings / what? And where is this, I can't see it in the company reports. If anything it's debt level seems to be dropping...
Please can we set a target cash in the bank equivalnt that we all have to use for our calculations. Without this our comparisons are meaningless
I am calculating Profit growth rate. Not EBITDA.
I do not see why one should ignore tax. After all it's taken off the company by the Government and can't contribute to growth.
If EDITDA means before interest charges on loans, again I dont agree. This interest has to be paid and therefore I don't see how it can contribute to growth
I agree Dep & Amm is an accounting fudge, so I'm going to ignore this from now on.
My Answer - I have modified the post the debt was 35% of liabilities and requested a 12% return bank rate as the comparison.
ReplyDeleteOn the Tax front I see your point - I'm not sure
Anyone have any comments??