Pretty much the entire rally from $14 to $23 was a PE re-rate, it was not driven by an increase in earnings expectations as the average price assumed by analysts has not changed (materially). As of yesterdays, FMG's blended forward 2 year PE was 14 which is one of the highest multiples FMG has traded at over the last 7 years... and now we have IO prices plunging again.
A forward PE at this elevated level just has no respect for the uncertainties FMG faces, its priced as if it is assumed that 100+ IO prices will remain and cost pressures will remain under control and FFI just works itself out.
To get back to a more normal 2 year blended forward PE of about 11, without an increase to earnings, would require a share price fall of about 20% from recent highs. That is why I believe FMG is overpriced here.
Iron ore price, page-43469
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Last
$21.59 |
Change
-0.040(0.18%) |
Mkt cap ! $66.25B | |||
| Open | High | Low | Value | Volume |
| $21.64 | $21.79 | $21.40 | $61.09M | 2.774M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 29 | 4418 | $21.59 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $21.60 | 4066 | 23 |
View Market Depth
| Last trade - 13.43pm 27/06/2024 (20 minute delay) ? |
| FMG (ASX) Chart |