EVO - Evolve Education

[Mitch]

He he he.!!!
Maybe Mitch it may pay to try www.nzx.com...lol.
Thanks w69.

hahaha okay will do!! could you explain to me a little bit more about the eps growth and PE ratio calculation please Percy?

[winner69]

hahaha okay will do!! could you explain to me a little bit more about the eps growth and PE ratio calculation please Percy?

Mitch percy wantsvyou read this

https://www.nzx.com/files/attachments/242229.pdf


I'll leave it to him to explain eps growth and pe

[Mitch]

Mitch percy wantsvyou read this

https://www.nzx.com/files/attachments/242229.pdf


I'll leave it to him to explain eps growth and pe

Awesome thanks. Winner69 are you personally holding in EVO?

[percy]

Here goes.
A company has earnings per share of 10 cents.
Going from www.4-traders.com,brokers research and company presentations we can work out they are projecting 12 cents earnings per share in the coming year.
We know that is 20% growth.I look for eps growth.
Now we can work out a PE [price earnings] ratio should be under that 20..So if we can buy that share at either a PE of 10= $1.20 or even a PE of 15=$1.50 we know we have a big margin of safety as with such strong eps growth of 20% the sp should go to 20 times eps ,which is $2.00.
So back to EVO.At present time I see ANZ Securities are showing eps of 13.57 cents,and a PE of 7.89 and a dividend yield of 4.58%.
I am expecting eps growth of between 11% and 14%,so with the PE is very reasonable.
Had the PE been 18 and growth 14% I would not have brought.
I have recently sold AIA pe 30.42,POT pe 34.68, and FPH pe 31.33 because I feel their growth rate is half their PE.This is the wrong way round.

[Mitch]

Here goes.
A company has earnings per share of 10 cents.
Going from www.4-traders.com,brokers research and company presentations we can work out they are projecting 12 cents earnings per share in the coming year.
We know that is 20% growth.I look for eps growth.
Now we can work out a PE [price earnings] ratio should be under that 20..So if we can buy that share at either a PE of 10= $1.20 or even a PE of 15=$1.50 we know we have a big margin of safety as with such strong eps growth of 20% the sp should go to 20 times eps ,which is $2.00.
So back to EVO.At present time I see ANZ Securities are showing eps of 13.57 cents,and a PE of 7.89 and a dividend yield of 4.58%.
I am expecting eps growth of between 11% and 14%,so with the PE is very reasonable.
Had the PE been 18 and growth 14% I would not have brought.
I have recently sold AIA pe 30.42,POT pe 34.68, and FPH pe 31.33 because I feel their growth rate is half their PE.This is the wrong way round.

Superb explanation, cheers Percy.

Say having an Eps growth of 2x the PE ratio, you would expect the share price to rise by a lot or is this a reasonably average health for a security?

Also, this seems like a very logical method, this works for you consistently?

[percy]

Superb explanation, cheers Percy.

Say having an Eps growth of 2x the PE ratio, you would expect the share price to rise by a lot or is this a reasonably average health for a security?

Also, this seems like a very logical method, this works for you consistently?

Yes it really works.
Always good to use when companies give forward forecasts,or surprise updates.
A lot of people do not do the maths.
When you find a company with eps growth 2x the PE,buy it.
Most times you will find a lot of good companies' PE is just above or below their growth rate.
When PE is 2x the growth rate, be prepared to sell, especially when the dividend yield is very low.
You can be right or wrong on the growth rate,but as it changes the ratios we are using remain true.
Well worth a read is the HLG thread.Current PE is 13.64 and eps of 23.09 cents.Yet a number of us are expecting eps of between 35 cents and 40 cents.
That is eps growth of between 50% and 70%.Makes the current PE look a bit odd.!!!???.Should the eps come in at 30 cents that is only 29% growth rate which is still 2x the PE.A good margin of safety.
Basically I base my investing on the book The Zulu Principal by Jim Slater.
Google that as there is a lot of imformation there.PEG is really what it is about.PE divided by Growth.Another one useful for NZ, because our companies pay out high dividends, is PEGD which is PE divided by growth plus dividend.

[winner69]

Awesome thanks. Winner69 are you personally holding in EVO?

At the moment yes - even though a sin stock which I don't normally 'invest' in

Just pretending EVO is #2 in Race 2 and worth a punt at overs.

[King1212]

Looks as though the market took your buying as a positive indicator.!!..lol.

Haha..good one Percy.....I could get in when it was 99cents but was waiting for AIR to hit $2.20 ish so I could sold n swap..but still happy to get in $1.05...

[Mitch]

Yes it really works.
Always good to use when companies give forward forecasts,or surprise updates.
A lot of people do not do the maths.
When you find a company with eps growth 2x the PE,buy it.
Most times you will find a lot of good companies' PE is just above or below their growth rate.
When PE is 2x the growth rate, be prepared to sell, especially when the dividend yield is very low.
You can be right or wrong on the growth rate,but as it changes the ratios we are using remain true.
Well worth a read is the HLG thread.Current PE is 13.64 and eps of 23.09 cents.Yet a number of us are expecting eps of between 35 cents and 40 cents.
That is eps growth of between 50% and 70%.Makes the current PE look a bit odd.!!!???.Should the eps come in at 30 cents that is only 29% growth rate which is still 2x the PE.A good margin of safety.
Basically I base my investing on the book The Zulu Principal by Jim Slater.
Google that as there is a lot of imformation there.PEG is really what it is about.PE divided by Growth.Another one useful for NZ, because our companies pay out high dividends, is PEGD which is PE divided by growth plus dividend.

Awesome help man, thanks heaps!
Makes a lot of sense, will definitely use this a tool for each investment in the future.
What is the main indicator for what the expected eps growth in the future will be? do you just get that from general analysts?

[Mitch]

At the moment yes - even though a sin stock which I don't normally 'invest' in

Just pretending EVO is #2 in Race 2 and worth a punt at overs.

What do you mean by a "sin stock"?
I'm partially new to some of the terminology.