Your fair value estimate equates to some pretty whacky valuation...

Your fair value estimate equates to some pretty whacky valuation metrics. For example:

	Column 1	Column 2	Column 3
0		$2.00	$3.50
1	Current P/E	1.76x	3.08x
2	1-yr forward P/E	1.30x	2.28x
3	Current div yield (fully franked)	28.50%	16.29%
4	1-yr forward div yield (FF)	38.20%	21.83%

If I ever get the opportunity to invest in a company of similar quality and growth prospects as REA at the above multiples/yields, you can be guaranteed I will be mortgaging the farm, selling my house, my car, my comic collection and putting every spare penny I have into it. Because $2-$3.5 would be the investment opportunity of a lifetime.

Although, I can say with a very high degree of certainty, that you won't see that price again. It would take an absolute catastrophe for the company to fall to $2-$3.5, an event which neither you nor anyone else could possibly forecast.

Which leaves me wondering, how did you get to a FV of $2-$3.5, as your 'optimistic' valuation? At <8% of the the market valuation, your valuation appears unreasonable. I'm thinking either you have an unrealistic return hurdle or your valuation methodology/inputs are incorrect. Maybe you could post your workings to support your $2-$3.5 fair value??

Regards
Gralynchett