twice the CEO stated that 'underlying NPAT' will grow by aprox 6%. Look at FY17 report and 'reported/statuary' earnings are considerably lower than underlying.
But nevertheless it is a downgrade and SP has responded. Plenty posts say RFG will go under but i feel it is very unlikely. many stores are doing well and cashflow whilst weaker than last FY is still coming i every week. They'll have to cut costs and cut the div esp that pertaining to 1Hfy18. I think they'll get through this and come out leaner and more considerate of franchisees.
SP now $2.42. I topped-up at $2.40 and have enough. So using SP of $2.42 I get:
based on earlier forecasts i estimated 35.8c EPS and 26.5c div. Now reckon 30c (12+18) EPS and divs of 21.5c which equates to a 72% payout ratio.
Not all sections are underperforming and overseas expansion remains on track. Good to see more effort to cut corporate costs.
So if I'm correct and using current SP of $2.42 it gives a fy18 PE of 8.07 and div yield 8.9% (net) and 12.7% (gross). Still good but a big change from indications provided not long ago by CEO. Perhaps i'm being too optimistic re divs as banks will lean on RFG. So they might go for 50% payout which is 15c ffr = 6.2% net and 8.86% gross.
Because debt is so large EV ratio is better and I'll post that soon after doing some stuff needing my attention. eg decent cup of coffee
RFG Price at posting:
$2.42 Sentiment: Hold Disclosure: Held
