Interesting questions Chris. I will do my best to answer. This...

Interesting questions Chris. I will do my best to answer. This is just my opinion.....

The ELD business has had a great year but as always price has a lot to do with expectations. ELD flagged the increase in FY22 EBIT quite early (but not before the war in Ukraine). The ELD SP initially appreciated on the news (up to $14+ in May) but then lost a bit of steam, probably due to concerns surrounding foot & mouth disease, lumpy skin disease and IMO a general sense that things couldn't get any better for ELD given the supportive seasonal conditions for much of Australian agriculture....

The big price drop (circa 22%) came just recently upon the announcement of the FY22 results. Despite a massive growth in EBIT there was some concerns raised around the impact of floods on the ELD business going forward and that the CEO, Mark Allison, is planning to retire toward the end of next year.

The other important point IMO was that ELD had been paying a very low rate of company tax over the last few years because they were able to claim past losses during the dark days of the early 2010's when the company almost collapsed. This year the tax rate went from around 5% in 2021 to 26% in 2022 so the increase in EBIT wasn't reflected in statutory NPAT growth. I think this may have taken a few investors by surprise (I know it did for me, as there are still retained losses on the books....not an accountant!) and I suspect this was also part of the reason for the dump.

I believe ELD is now significantly undervalued. All the drivers that have been contributing to the stellar earnings growth over the last 7 years are still in place and now ELD is back to being a full (almost) tax paying Australian company. So, that particular sword of damocles has been removed from above it's head and now ELD stronger yet again. With a trailing PE of under 10 (based on statutory earnings per share of 1.04) it is very much at the lower end of its PE range over the last 5 years.

Though floods have been devastating for some, I think it's reasonable to say that good soil moisture levels will be supportive of another strong year (at least one hopefully) for Aussie Ag generally speaking. But this is really just the cream on top for ELD as they are growing their earnings predominantly via growth of the business both by incremental acquisition and organically. This does not rely on good seasonal conditions but it doesn't hurt either.

If you're really interested I would suggest a read of the annual report which does a decent job at explaining how the ELD business works.

Cheers and GLTAH

Trev