@joewolf, I think that what is overlooked with this stock is...

@joewolf,

I think that what is overlooked with this stock is that it once was rated by the market on P/E multiples in the high-teens (in the decade after the GFC when it was a small cap darling and formed a large part of the small cap index).




By comparison, before the result, the stock was trading at just 10x P/E and even today, after the sharp share price rise since the result, it is only at about 11.5x.

Now I don't think anything near high-teens is the right multiple for this stock (especially not now with it carrying more debt than it has historically... although, at a touch above 2.0x Net Debt to EBITDA, it doesn't pose any existential threat to the company).

At a stretch, I think it's a market multiple stock, so around 15x-16x, but more realistically a 10% to 15% discount-to-market multiple, i.e.. 13x to 14x, doesn't sound unreasonable.

So I think it still has room to re-rate upwards by around 15% to 20% from its current 11.5x level. Add in an additional 10% to 12% EPS growth in FY2024 from the normalisation of the business following the supply chain disruptions of the past 12 months, and you've still got some 25% upside to the share price, in my view.

By the above reckoning, the fundamental value of the stock is around $12.00.

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