SUM - Summerset Group

[BlackPeter]

Perception of quality of earnings creates a premium

Graham formula .....probably put it on a PE between 50 and 100 .....wow

Can you help us to follow your maths?

In my books the forward PE (based on average estimates for the next 3 years) is 9.9 and the backward PE (based on earnings since 2010) is 20.7.

forward CAGR (3 years forward, 4 years back) is 23.7.

Putting these data into the original Graham formula comes up with a target of nearly $40 (or $24 if I use Rogers more conservative formula);

Ah yes - and if you are a Slaten fan ... PEG is 0.42.

Must be a sell ;

[winner69]

Can you help us to follow your maths?

In my books the forward PE (based on average estimates for the next 3 years) is 9.9 and the backward PE (based on earnings since 2010) is 20.7.

forward CAGR (3 years forward, 4 years back) is 23.7.

Putting these data into the original Graham formula comes up with a target of nearly $40 (or $24 if I use Rogers more conservative formula);

Ah yes - and if you are a Slaten fan ... PEG is 0.42.

Must be a sell ;

Looks like you done maths anyway

Doesnt it show this Graham formula is a bit (don’t know which word to use) these days.

[percy]

Looks like you done maths anyway

Doesnt it show this Graham formula is a bit (don’t know which word to use) these days.

I think I read in one of Buffett's books to look at a company's five years earnings and dividend growth record,but noted it was better to base any investment on ten years of earnings and dividend growth,allowing for one bad year.
No insight into how to value any company with negative earnings and not paying a dividend.
Jim Slater also would not look at loss making companies.
So I agree Graham formula too is a bit...……[I don't know either] these days.

[BlackPeter]

Looks like you done maths anyway

Doesnt it show this Graham formula is a bit (don’t know which word to use) these days.

I don't know any financial model which can give you an accurate idea of the future share price of a security - and if there would be such a model, than it would not work in a level 2 chaotic system if system participants (that's us ...) would know it.

I do use a number of models helping me to recognize potential - and the Graham formula is one of them. It tells me that this security has potential to grow - and maybe more so than some other securities I could hold instead. That's all.

[Patient Panda]

I think I read in one of Buffett's books to look at a company's five years earnings and dividend growth record,but noted it was better to base any investment on ten years of earnings and dividend growth,allowing for one bad year.
No insight into how to value any company with negative earnings and not paying a dividend.
Jim Slater also would not look at loss making companies.
So I agree Graham formula too is a bit...……[I don't know either] these days.

Spot on. I believe dividends are not of concern to him so much so long as the retained capital is being spent in judicious ways with strong returns.

this is one of the main reasons I have never bought into a loss making company regardless of how good their revenue growth or their story sounded and it has worked very well for me.


almost all valuation methods will indicate very strong value proposition in SUM at current prices because it is great value at these levels. I unusually took up the DRIP as was more than happy with the strike price. Normally prefer to take divis in cash and allocate it to where I see best value but no need in SUMs case.

[Beagle]

A reminder. $105m underlying profit is my forecast for the FY18 year. No matter how you do the SUM's the forward underlying PE of about 16.5 is very cheap compared to the historical average growth rate and the current years projected growth rate. In my opinion patient investors will enjoy outstanding rewards in the years ahead.

[winner69]

Spot on. I believe dividends are not of concern to him so much so long as the retained capital is being spent in judicious ways with strong returns.

this is one of the main reasons I have never bought into a loss making company regardless of how good their revenue growth or their story sounded and it has worked very well for me.


almost all valuation methods will indicate very strong value proposition in SUM at current prices because it is great value at these levels. I unusually took up the DRIP as was more than happy with the strike price. Normally prefer to take divis in cash and allocate it to where I see best value but no need in SUMs case.

Still trying to work out what the highlighted bit is saying. I’ll get it one day

[Patient Panda]

Still trying to work out what the highlighted bit is saying. I’ll get it one day

Some serious circular reasoning going on there!

will correct by saying Using a proven business model of capital recycling and ROE of >25% every year for last 5 years. Reuters says ttm ROIC of 10.46 so massive value being created when debt only at 4.15%

Underlying PEG on a forward basis around 0.65

[peat]

Still trying to work out what the highlighted bit is saying. I’ll get it one day

cheap as chips?

[winner69]

Some serious circular reasoning going on there!

will correct by saying Using a proven business model of capital recycling and ROE of >25% every year for last 5 years. Reuters says ttm ROIC of 10.46 so massive value being created when debt only at 4.15%

Underlying PEG on a forward basis around 0.65

Pretty good return on capital eh

However what is the price / value of those “massive returns” ...market seems to think $7.60 odd which seems more than fair for a company whose book value is – massive amount of market value added at $7.60 eh