The last annual report for Mortgage Choice as an independent company is FY20. Earnings per share was 75 cents.
Prior to the acquisition announcement in March 2020, Mortgage Choice was trading at $1.195 per share. For $244 million for 100% shares, it was equivalent to $1.95 per share or 75% premium. PE ratio was 26x under 75 cents earnings per share.
Given Mortgage had a 31% net profit decline from FY19 to FY20, it was a bad decision to buy a declining business at 26x PE ratio or 75% premium of the market price.
REA Price at posting:
$122.04 Sentiment: None Disclosure: Not Held
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