bad news?, page-2

Around the Traps ... with THE FERRET
07:21, Friday, 18 February 2005

Sydney - Friday - February 18: (RWE Australian Business News) -

(thanks goes to Fig_Jam)

COMPUTERSHARE (CPU) joined Leighton in the "forecast unchanged"
trough yesterday.

It plunged 68c to as low as $5.85 before closing at $6.06 after
reporting a first-half net profit rise of 15 per cent.

It was these words that the market took as a downer ... "In the
context of these factors, excluding the expected positive contribution
of EquiServe, we are at this time, remaining with our previous guidance
that contemplates revenue growth greater than 10 per cent and earnings
per share growth greater than 20 per cent".

*****

That EPS can be a bit of a quandary for us amateurs when
analysing Computershare.

The company has no fewer than five different figures for it.

In the market announcement it says, "Normalised earnings per
share (pre-goodwill and post preference shares and outside equity
interests (OEI)) rose from 8.49c to 10.21c (up 20 per cent)".

However, in the accounts EPS is shown in these forms - "basic"
7.99c, "normalised basic" 6.28c, "diluted" 8.21c and "normalised
diluted" 6.5c.

And, guess what, none of the four is 20 per cent higher than
the previous corresponding period.

Whatever figure you care to use there is no doubt Computershare
is trading at a very high p/e, which was the main point of our piece on
the stock back in October after it announced the proposed acquisition
of EquiServe, one of America's biggest share registrars, and the shares
rose $1.40 to as high as $5.60 before closing at $5.25.

We thought it was nutso behaviour at the time but what would we
know ... the shares have been trading as high as $6.60 this month, so
all those buyers back in October made money.

But, getting back to the EPS, if you take the highest figure
mentioned yesterday of 10.21c, and "annualised" it to 20.42c, it will
put Computershare on forward p/e of a touch under 30.

Take the lowest, 6.28c, and it's a forward p/e of almost 48.