csl

Here's UBS Asset Management's head of Aussie equities Jakov Males fulminating against the market's "valuation ignorant obsession with earnings growth":
At the stock level, CSL is a prime example of this willingness to pay massive premiums for traditional growth stocks, whether they deliver the growth or not.
At the full-year result this week, CSL achieved their guidance of about $1,470m and just 5% growth by excluding the losses from their flu business. This number also includes a foreign exchange gain of about $115m. The normalised number is over 25% lower than where expectations were one year ago. This performance is clearly not the kind of quality growth expected from a company trading on over 30 times.
The company then guided to 11% growth for 2017. However, the starting point for this growth includes the flu loss and excludes the foreign exchange gains for a base of just $1,152m and a 2017 earnings target of $1,278m. Therefore to report a number showing some growth, various one-offs were included, but to ensure growth for the following year these same one-offs were removed from the base.
That is, the company is asking the market to accept $1,470m as the measure of the performance in 2016, and $1,278m (-13% lower) as the target in 2017, and arguing this still represents growth. In fact, earnings have grown by less than 2% p.a. since 2010. It would be understandable for the market to have hammered the stock over this period. Instead, CSL has been consistently re-rated from an average in the high teens before 2013 to about 30 times now. CSL is one example of many of this trend.