value, page-2

Pauley 2, you are right that value is something to be mindful of. Which leads to the question - is WOW offering its shareholders value?

Just because a company is a great company and has everything going for it (dominant market position, strong cashflow etc), it doesn't mean it is good value at the current share price. WOW's P/E ratio is just under 18 based on 2009 forecasts. Even based on 2011 forecasts (which are assuming growth in EPS of 10% per annum) the P/E ratio is over 14. I'm not convinced in the current economic environment that 10% EPS growth is achievable even for a market dominant supermarket chain (especially as competitors are starting to come out of the woodwork - even though I don't see Costco and Aldi as a threat to Coles and Woolworths position as market leaders they will make a dent in growth).