Hi madamswer, I value your thoughtful contributions to this thread. I agree that the PE has historically got to euphoric levels and that the current PE represents much better value for a company that has shown historical long term growth. I'd be interested to get your take on the below.
I agree that companies that can grow ROE at over 20% (as CSL has historically done) should retain as much capital as they need to facilitate profitable growth and that it is in shareholders best interests to forego the dividend to facilitate this growth. Since the debt levels have grown in recent years, I've looked at ROC as a more reliable indicator of that highly profitable growth, as debt inflates ROE performance. One slight concern that I have, is that the ROC seems to have decreased over the past few years from in the 20%'s to low double digits. I'm trying to determine if this is in part, some indigestion from the Vifor takeover and integration into the larger business or if it is more of a sign of a larger maturing business whose earnings growth may moderate and slow. If it is the later, I would hope to see this reflected in the management teams capital allocation and an increased portion be delivered to shareholders in the form of buy backs and dividend payout % raises. Or alternatively actively reduce the debt burden. Thoughts?
CSL Price at posting:
$261.10 Sentiment: Buy Disclosure: Held
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