Ann: GCS FY16 Results - Reports Strong Underlying Performance-GCS.AX, page-4

I agree @Wini , however my only issue is that the market has historically valued GCS on a lowish P/E. If you look back to 2011 for example, they were generating $49.5M op cash flow, and valued at a $176M market cap, trading at around 3.5 x OCF, and a 9 x P/E. Similarly, 2012 saw a sub 10 x multiple, as have the years 2013, 2014 and 2015.

I believe the underlying thesis for GCS to re-rate, would need to be significant EPS growth, which would in turn spur a multiple expansion to somewhere between 10 to 15 x. Acquisitions would do the trick, but not at the expense of dilutive raising in lieu of raising more debt (assuming that management's present goal is debt reduction). They could of course fund future acquisitions from cash flows, they have a lot of that!

There's a lot to like about this company, in particular it's cash generating ability, as you've previously alluded to. I can say myself that i haven't seen any other company's trading on a Free Cash Flow yield of almost 25% recently.

What were your thoughts surrounding a future re-rate, were you expecting (a) EPS growth, (b) multiple expansion, or both (what i like to call the double whammy)?

Cheers