Morningstar could be right. A PE of 10 could be right.
I prefer not to be too rigid but rather look at the whole picture including risk.
FMG has a low cost structure which reduces risk.
FMG has excellent management which reduces risk.
FMG has a lower grade 58% Fe product which increases risk.
FMG has growth via IBO which adds value.
FMG has renewable exposure via FFI which adds value.
FMG has a pristine balance sheet which reduces risk.
FMG is Aussie selling to China which increases risk.
On balance when taking a conservative assumption for the IO price I think a PE of 10 is okay but it is a personal decision.
Analysts often use a PE of 15 for BHP because it is diversified with copper etc By comparison to FMG the BHP management is crap and BHP has a poor history of managing capital. So on that basis I see a PE of 10 as reasonable for FMG. However smaller companies like Champion have a PE of more like 5 long term. So it is a personal decision.
For me personally I am happy with a PE of 10 for FMG when using a conservative long term IO price assumption. That is why I personally won't sell my FMG shares unless they are over $40 and right now am buying. I value FMG at about $30.
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Last
$18.87 |
Change
0.590(3.23%) |
Mkt cap ! $58.10B |
Open | High | Low | Value | Volume |
$18.86 | $18.90 | $18.44 | $375.1M | 19.96M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 900 | $18.86 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$18.88 | 3586 | 4 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 900 | 18.860 |
1 | 33 | 18.800 |
1 | 969 | 18.790 |
2 | 412 | 18.760 |
20 | 17103 | 18.750 |
Price($) | Vol. | No. |
---|---|---|
18.880 | 3586 | 4 |
18.890 | 9058 | 9 |
18.900 | 36211 | 15 |
18.930 | 4444 | 2 |
18.940 | 15238 | 3 |
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