"a structural growth distribution business and should therefore have a multiple of 18x, and >20x"
I can't quite agree with you here.
The numbers that catch my eye most with this company is the NPAT line which, for the most part, represents between 1 and 2% of Revenue.
The distributors, SNL and GUD, mostly manage numbers between 7% and 15%.
The problem with 2% on the bottom line is that growth needs to continue at quite a rate at the top to move the number at the bottom particularly when Westpac is now clipping the interest ticket on the way down.
Distributing the full EPS as dividends when interest rates were negligible was no issue but it's a different world now.
I note that their 2022 result reflected Trade Creditors at about $484 million which, when compared to their COS for the 2022 year of about $2,800 million suggests that "Creditors Owed" are out at about, or close to 90 days (I'm using a bit of imagination here) but it all makes me wonder how long the "full" dividend distribution can continue.
It wouldn't take much to tidy this all up and I understand that acquisitions can have a short-term impact on the look of a Balance Sheet.
My point is that any upward adjustment to loan requirements and therefore interest costs or downward adjustment to dividend payouts could represent a hit to the SP.
I regard their management skills highly and this was evidenced by the way their trend lines hardly wavered through the Covid years but 18x is just a bit too high for me now.
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