2011 forward p/e ratio

In its recently released production update and guidance where the company forecasts up to 22koz production december quarter, GDO forecast EPS of 7c for 2011...

At recent SP of 0.32 that equates to a forward PER of 4.6

If you read the production guidance closely you can see the assumptions (excluding gold production rate) from which the 7c EPS stems, namely exchange rate and POG conditions over 2011, are conservative as well as being based on some independent advice...

Lets assume for arguments sake that the company dramatically fails to reach their EPS target and the figure turns out to be 5c... At current SP that equates to forward PER of 6.4


That leads to the conclusion that even if GDO dismally fall short of its 2011 production targets (EPS ~30% below target) we are trading at a forward PER of ~6x, and that on a basis of targets being fulfilled we are currently trading at ~4x PER...

These forward PER's are so low I'm not going to bother to lay out peer comparisons.

I believe solid profit from gold production and the meeting of production guidance for the december 2010 qtr will, all South Africa sovereign risk aside, generate confidence and attention in the market that will see a significant shift in the above ludicrous PER figures.

The recent BRW article stated "GDO is simply cheap relative to its peers." Understatement of the year that one.