Disclaimer: This is all IMO. DYOR and don't listen to fools on...

Disclaimer: This is all IMO. DYOR and don't listen to fools on the Internet to make your investing decisions.

Taking a look at the past.
Below is a look back at the PE ratio GRR has been trading at, and what the SP would do based on the price earnings ratio remaining relatively neutral.

Assumptions
The numbers for 2022 is my predicted result, with the assumption of $300m NPAT and price prediction based on a conservative 3.5 PE ratio.
Price is taken from the SP in March of each year. NPAT listed is for the year prior, e.g. NPAT for 2021 is actually '20/21 FY
NPAT chart value is NPAT /100 for charting purpose.



Observations
If PE remain around the 3.5 region, we are looking at a potential share price of .91. As we can see from looking back at the last 5 years or so, as profits grow and the attraction of dividends build, confidence in the company builds as well and so does the PE ratio. I think it is far more likely that over this year we will see a PE ratio between 5-7, which suggests a share price of $1-$1.5.

Why GRR?
ASX tech sector is trading at an average pe of -77 (no comment).
The ASX at large, trades at an average pe of 25.

Other iron ore companies on the ASX are trading quite cheaply in comparison to the wider market, and I would argue that they are attractive prospects, but when held up against GRR, it is a pretty obvious choice:



It's a little hard to walk past a company like GRR, which has just put out such results and to keep walking. It is only a matter of time before the market wakes up to this as well, as we have seen a preview of in these last few months.

Iron
Of course all the predictions above are based on forward looking estimates of what will happen with the price of iron. My view is that with whispers of inflation and countries showing no signs of slowing down in the printing of money, the suggestion is that the price of commodities is going to boom, especially iron. There are some great posts on this forum by @rocket973 and @miningnut, who track GRR's shipments and pellet price movements which help to paint a picture of the bundles of cash GRR are pocketing right now.

I believe if the upward trend in the price of iron continues, the hype train will take off and we will see iron ore companies rerate to much better valuations - especially GRR. Regardless, in my view GRR represents the best value on the ASX with outstanding potential to capitalise on a boom in IO.


GLTAH.