Why is CVT so overpriced? P/E of 30?
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Why is CVT so overpriced? P/E of 30?
If you believe in analyst forecasts - forward PE is roughly 21 and forward earnings CAGR is 8. Based on these forecasts SP looks about right.
Obviously - analysts are about as often wrong as they are right, but still ... there might be potential.
Market might as well see a new and quite promising management team. I guess, it doesn't work always if they hire top guns, but if it does - the sky might be the limit. If you didn't look at the story they told in the last AGM, now might be a good time to look at it.
David Banfield (CEO since a bit more than a year) turned Methven from a tired disappointer into a star performer - and the CFO (Nigel Greenwood) used to be one of the main contributors to bring SML to its previous heights. He left Synlait before they took the dive - i.e. just watch his moves - if & when he is leaving CVT, watch whether the music might stop ;).
Anyway - hold a medium sized parcel and not worried :):
... actually - just checked the latest analyst consensus which went upwards after the recent announcement. Forward P/E (based on analyst estimates) is now below 20 and forward earnings CAGR would be 10.
Again - analysts are sometimes right and sometimes wrong, but so is everybody else when looking into the future. However - based on these numbers CVT does not appear to be too dear.
Thanks BP. I appreciate the posts. I must admit I threw out the 'overpriced' line to see if any holders would come riding to CVT defense and peak my interest. Your posts did so I have done some research and have come to the conclusion CVT is a good bet.
The new strategy makes a lot of sense. Management team are stars as you say and the story makes for compelling reading, easy to get on board.
I'm going to get a small position on Tuesday :)
The time to get interested in CVT was when they realised that generating real cash (positive cash flows) was actually important
Always amazed me that when punters were in love with CVT and the share price headed way over 10 bucks they weren't even cash flow positive
They appear to have learnt that lesson
So probably onwards and upwards
That's a cool graph W69!
The one thing I haven't figured out is why are they forecasting only mid single digit revenue growth? That's more in line of a mature company no? I thought with China and North America the growth could be double digit or at the very least high single digit?
I love the margin improvement and bottom line growth but top line is still important.. gains from cutting middle management and simplifying the business only happen once.
Is it more a honey bee or production issue?