I look at the price of a share differently. I think of it as a risk weighted net present value of future dividends.
Currently the market thinks AB1 will pay out over its life 9.8c in todays money in dividends.
Now if your calculations show an EPS by the end of this year at 2.5c, then 9.8c is clearly too low.
But markets are good at pricing in risk and many investors here can't see how AB1 could fail or not perform at their perceived level. Perhaps I can ask you, and try to be as dispassionate as possible, what chance do you give of AB1 not reaching that EPS this year? If you say 50/50 then you can see how quickly the SP is affected by the leverage of reduced EPS taking risk into account.
Of course the market is also not rational and we all know it's hopelessly manipulated so a stocks price can fire or flop on the vagaries of sentiment.
As a mug retail punter the best you can do is analyse the stock, be patient and hope you're lucky too.
AB1 Price at posting:
9.8¢ Sentiment: Buy Disclosure: Held
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