Interesting times ahead, page-70

I actually think Blommer made an excellent point there, and not one often thought of but everyone is actually subconsciously thinking of.

I think it is a good point to make that companies recently IPO'd within the last few years are deemed more risky given the Dick Smiths debacle still fresh in everyone's minds and it shows in the share price. For instance I doubt it made many want to jump at Inghams IPO when it happened.

Spotless and dick smiths do have simalarities. Both were brought by private equity then IPO'd a few years later for much much more. Id have been spewing if I bought Spotless IPO cause it was indeed over-valued.

I what I stated above has spooked the market into overselling spotless. That huge drop in share price when EPS only moved from 13 to 11 was not warranted but I think the issue is the falling future projected EPS which impacted the share price more. Hopefully with miners starting to turn good profits again and other sectors in the Australian economy looking up I think a turn around for spotless is indeed possible.

It looks cheap at the moment but its important to remember that companies trading at 16 times PE ratio have growing projected EPS. Spotless needs to manage this and we again may be closer to the PE ratio of 14 again rather than 8.38

The gearing ratio is also probably pushing spotless down along the constant acquisitions. All it takes is a couple of badly thought out acquisitions to sink a company. Slater and Gordon is very fresh in everyone's mind after that disaster of an acquisition they made in the UK combined with changing of laws in the UK. A combination of a bad acquisition and bad luck has SGH pretty much finished.

These are the main reasons I can see for Spotless share price perhaps being oversold. Imagine if Dick Smiths didn't happen. Slater and Gordon didn't happen. Where would the market value Spotless then? Perhaps a little more favorably I think.

For the moment I liken it to a Bank stock not long after the GFC.