compelling value

Searching around on the internet and found this broker coverage info concerning CUS at investsmart:

http://www.investsmart.com.au/shares/broker_consensus.asp?SecurityID=CUS&ExchangeID=ASX&Recommendation=SHOWALL

Shows more and more brokers coming on board with buy ratings for CUS, with the latest broker rating CUS a buy on 5 febraury 2010. Average 12 month price target for 5 brokers is $3.65. Current price is therefore approximately at a 43% discount to average broker valuation. This is of course not taking into account the capital return and dividends to be paid this year which bumps your return up to around 50%+. Great buying opportunity at the moment. Although the material doesnt mention earnings forecasts it has to correlate with the brokers actual forecasts which range from roughly 18cps to 21 cps.

I have moderated my personal earnings expectations but think that its reasonable to expect EPS of +25cps this financial year with earnings for this half at 11.5cps, and earnings for the second half at 13.5cps. At 25cps thats close to 20% higher than the highest forecasts so if we get that you would think there will be some big upgrades by the brokers!!!


As an aside, although I dont think it applies in the case of CUS, there are some interesting observations by Orbis (an Australia value fund manager) about the worth (or lack thereof) of analyst recommendations as found in theire Q4 fund report:

http://www.orbisfunds.com.au/reports/SMEF-QuarterlyReport2009Q4.pdf