Heatleys will make its first full six-month contribution in the second half of fiscal 2019, providing earnings momentum which analysts at Argonaut expect will result in a net profit of $2.2 million, representing earnings per share of 2.3 cents.
Stealth’s shares closed at 14 cents on Tuesday, implying a fiscal 2019 PE multiple of six relative to Argonaut’s forecasts.
The broker values Stealth at 25 cents per share, implying upside of approximately 70% relative to yesterday’s closing price.
Potential catalysts are further acquisitions which management has said it may consider, as well as success in securing new contracts.
There could also be a PE based rerating given that the group is expected to generate a profit of $3 million in 2020, representing earnings growth of 40%, suggesting the current PE multiple is heavily discounted.
Acquisitions and/or the securing of new contracts would likely see the focus turn to Stealth’s 2020 financial metrics, increasing the probability of a PE based rerating.
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