sp at fair value

MikeMennell suggested I look at SDM. I normally do not comment about shares that I do not own, simply because I would normally not have thought too much about them.

SDM is a great share, but it is not an unknown share wasting its sweetness on the desert air (apologies to the Mr Gray the poet). I like to consider a share from a number of angles, and then decide on a reasonable PER, and then multiply the PER by the EPS and compare it to the SP. A share that bothers me would have a PER below 10, an average share about 15, and a good one above that. I also want it to pay a dividend of about 5%, and the ratio of dividend to EPS is also a consideration.

SDM has an EPS of 16.1 cents and a fully franked dividend of 8c - a good ratio for an expanding company. Its Sp is $2.68 today, which gives a PER of 16.6, which is about right in my guesstimation. I am thus ambivalent about it. I would hold it if I had it, but I would not buy it at that price today. In a bull market it would be a goer at a PER of 16.6.