I was just reading Goldman Sachs research on my Commsec account.
They have a buy recommendation on FMG & Rio (not BHP) and FMG target price of $9.80 (research release date 13 August 2019).
"Upgrading iron ore, Buy RIO and FMG: We think iron ore will rebound to US$110-115/t in 4Q post Chinese Golden week and recommend investors buy RIO and FMG post the recent share price weakness."
"We increase our FMG NAV to A$7.73/sh and TP to A$9.8/sh (set at 50:50 NAV:3.5x EBITDA NTM) and upgrade to Buy on valuation (0.9x NAV) and an attractive FCF yield of 13% in FY20 despite higher capex and cash tax."
They have following graph re forward estimates and earnings per share.
I am interested by the EPS on right of graph. If EPS plays out as predicted, then consider the following simple analysis.
You buy FMG share today for $7.50 - your payback in year 1 is $1.50 (whether in dividends or profit retention which improves the balance sheet). Therefore after year 1, your cost of FMG share has effectively been reduced to $6. In year 2, EPS is predicted at 70 cents per share and on your "reduced" $6 cost base, the stock is now trading on PE ratio of 8.57 ($6 divided by 70 cents), even in a more normal IO pricing year (if we consider 2020 as an abnormal year).
Therefore, my conclusion based on fundamentals, you can't go wrong buying FMG at current price of $7.50. Remember, Goldman Sachs has net asset values at $7.73.
- Forums
- ASX - By Stock
- FMG
- Iron ore price
Iron ore price, page-15727
-
- There are more pages in this discussion • 37,449 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add FMG (ASX) to my watchlist
|
|||||
Last
$20.14 |
Change
-1.180(5.53%) |
Mkt cap ! $62.01B |
Open | High | Low | Value | Volume |
$20.65 | $20.83 | $20.02 | $262.9M | 12.91M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 1250 | $20.14 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$20.15 | 2500 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 1250 | 20.140 |
8 | 4822 | 20.120 |
9 | 22766 | 20.110 |
43 | 51948 | 20.100 |
2 | 1300 | 20.090 |
Price($) | Vol. | No. |
---|---|---|
20.150 | 2500 | 1 |
20.200 | 3990 | 1 |
20.210 | 500 | 1 |
20.250 | 1123 | 2 |
20.270 | 2733 | 2 |
Last trade - 16.10pm 25/07/2024 (20 minute delay) ? |
Featured News
FMG (ASX) Chart |