Whilst I'll use an abundance of sources to try and work out a good valuation for a company, the 'fair value' from simply wall street is rarely ever a good go to for valuation. I'm not sure if this is industry specific (i.e simply wall street valuation methods cant seem to get a good valuation for mining companies). I'm not sure what algorithm they've used to get a $20+ share price valuation, but even hardcore WHC fans would admit this valuation is very stretched.
Another stretched valuation, for example, is RMD - which their fair value is $52. A whole 50%+ higher than where it currently is.
Having high ROE is certainly a good metric to use, but also remember that ROE can be manipulated. One can reduce the 'E' to make the return appear higher.
WHC ROE has been a bit choppy and all over the place for the last 10 years. I'd say it has only ever been fantastic in the last 2 years. Can it keep those numbers going? Maybe? We'll get a bit of an idea in a week or so.
Again, this just shows the cyclical nature of investing in a company of WHC and the importance of trying to pick the 'lows'.
WHC Price at posting:
$7.82 Sentiment: Sell Disclosure: Not Held
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