FPH - Fisher Paykel Healthcare.

[Harvey Specter]

Sparks loved Ben Graham and his intrinsic value methodology

A 15% growth and 20 cents eps that gives $7.70

Sparks liked to apply a 20% discount as a safety net ...ie $6.16

So current price seems pretty fair .....20% discount tp intrinsic value

BUY it is

But is that Growth sustainable? Go back only 3 years and the growth does't look that flash. Plus EPS for 2014 was 17c (19c forecast FY15) which knocks a bit off?

[percy]

[QUOTE=Harvey Specter;524140]But is that Growth sustainable?
The choice is yours to make.
If you think it is, then FPH are great value.
If you don't,you don't buy.

[Beagle]

Sparks loved Ben Graham and his intrinsic value methodology

A 15% growth and 20 cents eps that gives $7.70

Sparks liked to apply a 20% discount as a safety net ...ie $6.16

So current price seems pretty fair .....20% discount tp intrinsic value

BUY it is

Just for the sake of a healthy debate, (humour me for a minute here), lets apply Ben Graham's formula to MFT.

Based on my research MFT has grown EPS consistently over the years and has averaged a 14% growth rate in EPS, (latest half year grew by 14%) so as they continue to roll out their global freight and logistical capabilities there doesn't seem to be any reason why they can't continue to grow at 14% per annum.

Using V = eps x (8.5 + 2g) where eps is 82 cps and g is 14 we get....wait for it
V = $29.93 !!
Bring up a 5 year chart of MFT and have a look at the consistent nature of the uptrend you'll see why various brokers have this puppy as a three times pick.
Even using Sparky's 20% discount to intrinsic value we get $23.94 a whopping 49% premium to their current SP of $16.10.
More consistent growth than FPH just not in a sexy sector. Interesting comparison wouldn't you say ?
Disc I own some MFT

[winner69]

Ben had another version which took bond rates into account

Take original calculation and multiply by 4.4 and then divide by a really safe bond rate.

AIA bonds are about 4.4% so his other version gives same result as original version.

[winner69]

The 8.5 + 2G in Bens formula is the PE ratio that will be applied to get the IV.

That's why Bens formula gives some outrageous valuations.

Ben lived in times when high growth was not that common.

I debated with Sparks that Ben's formula not really appropriate for high growth tech companies because of this but got told off in even doubting the genius of Ben. It is valid for high growth companies I got told.

I haven't changed my view but there are many disciples of this type of methodology out there. I say good luck to them

[Beagle]

Personally mate I use the V = eps x (8.5 + 1g), then you know you're buying value !!!

[winner69]

Maybe the discounted Ben Graham value of $6.20 is ok'ish

Put it that way if I had $3.6 billion spare I wouldn't be buying FPH (with debt) knowing this years free cash flow is not likely to be much more than $100m ....3% return

[percy]

Just for the sake of a healthy debate, (humour me for a minute here), lets apply Ben Graham's formula to MFT.

Based on my research MFT has grown EPS consistently over the years and has averaged a 14% growth rate in EPS, (latest half year grew by 14%) so as they continue to roll out their global freight and logistical capabilities there doesn't seem to be any reason why they can't continue to grow at 14% per annum.

Using V = eps x (8.5 + 2g) where eps is 82 cps and g is 14 we get....wait for it
V = $29.93 !!
Bring up a 5 year chart of MFT and have a look at the consistent nature of the uptrend you'll see why various brokers have this puppy as a three times pick.
Even using Sparky's 20% discount to intrinsic value we get $23.94 a whopping 49% premium to their current SP of $16.10.
More consistent growth than FPH just not in a sexy sector. Interesting comparison wouldn't you say ?
Disc I own some MFT

MFT is a great company in the transport sector where there is no moat.
FPH is a great company in the health sector and has a deep moat.
Best to own both.!!!

[Beagle]

I take your meaning mate but I would debate that acquiring the skills, capital, machinery, systems, infrastructure and personnel to set up a freight and logistics company with a global footprint is not exactly a "no moat" situation.

[macduffy]

I like FPH too, percy, but never owned any, other than via F&P in the old days.

Not so sure about the deep moat though. Musn't overlook the competition from Resmed, RMD, whose SP has also been going great guns lately.

Cheers