A forward P/E of about 13x for a business forecast to grow earnings at 80% seems high to you? Hmmm. You are obviously referring to the trailing P/E but why reference that, especially for a business that has guidance out for FY19.
Sure, there's risk in a small cap finance business but the article referred to is very thin on substance. Management are already planning (and provisioning) for a mild step up in arrears from arguably unsustainably low levels, as is common for a maturing book of this type. Are you aware of approval rates in the transport business, and their trajectory? AXL have been quite selective in the provisioing of finance and to date have priced this well. The level and extent of personal guarantees, coupled with accelerated payback profiles also act as significant risk mitigants.
If AXL traded on a market multiple, it would be more than $3 a share.
AXL Price at posting:
$2.48 Sentiment: Buy Disclosure: Held
