ONT 1300 smiles limited

It is the valuation associated with their business model that is...

  1. 619 Posts.
    lightbulb Created with Sketch. 94
    It is the valuation associated with their business model that is triggering some smoke alarms here.

    As @travelightor pointed out, the ROE has been decreasing over the years from 40% down to 20%.

    Every $100 they are investing back into the business isn't generating $40 anymore. It has dropped from $40 to $20. Will it drop to 10%? I don't know but the trend isn't positive.

    Put a 20x valuation on top of that and the business is overvalued IMO.

    At that valuation, you can buy a wide moat business such as CBA or a Westpac with similar ROE at a cheaper price. Less risk. Cheaper price and just slightly lower ROE.
    Last edited by stan255: 15/08/19
 
Add to My Watchlist
What is My Watchlist?
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.

Currently unlisted public company.

arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.