CBA Demerger Makes CUP a Target, page-7

Perhaps it is takeover rumours that is causing the SP increase. Perhaps it is anticipation of another 20% earnings growth, as was reported last year as underlying. If this were the case, then one could expect a 20% share price increase on 12 months ago, and in addition some PE expansion due to rerating of the stock. (Keep in mind that the abnormally high PE of 27 that is currently reported for CUP is largely an artefact of the once-off writedowns booked last fin year which resulted in an EPS of 2.8cps).

As long as CUP keep delivering on earnings growth and margin expansion, there is a huge amount of upside in CUP over the long term. The sector is trading at 17.2 PER, which is very healthy.

Did anyone mention the debt-free status of CUP?