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bpinvestnstocks

1,848 Posts.

218

20/04/17

15:42

Post #: 24171960
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Originally posted by Cain Treanor ↑

So when you said $2 Billion to break even, All you are saying there is that investors want to earn 10% profit on their funds. (not break even at all)

So to cross that over to how much they should be willing to pay for the equity in my example, it would look like this.

Current equity per share = $3.32 (producing 29% return on that equity)

If an investor wants a 10% return, he can pay 2.9 X the face value of that equity.

e.g. $3.32 x 2.9 = $9.62

(of course the return on the equity will fluctuate year to year, so you would want to discount that expected return, but even reducing the current 29% return down to 20%, still gives the equity a fair value of $6.64 and end of year $8, not to mention a premium would normally be paid for companies able to reinvest earnings at rates of 20%)

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"Current equity per share = $3.32 (producing 29% return on that equity)"

?

Been (sort of) following your argument with barkston - but where are your figures from please Cain? Are you projecting the yearly will be double the half yearly?

FMG Price at posting: $5.18 Sentiment: Hold Disclosure: Not Held
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Last $21.59		Change -0.270(1.24%)		Mkt cap ! $66.47B

Open	High	Low	Value	Volume
$21.71	$21.80	$21.51	$95.00M	4.393M

Buyers (Bids)

No.	Vol.	Price($)
2	7115	$21.56

Sellers (Offers)

Price($)	Vol.	No.
$21.59	4291	2

View Market Depth

No.	Vol.	Price($)
1	2000	21.560
2	1400	21.550
1	350	21.530
2	4040	21.520
24	31366	21.510

Price($)	Vol.	No.
21.590	4291	2
21.610	1230	3
21.620	13738	3
21.630	100	1
21.640	2200	2

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