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$27.24 fortescue ltd

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Barkston

956 Posts.

1

19/04/17

15:48

Post #: 24145104
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Originally posted by Cain Treanor ↑

What were you basing the valuation on?

There is over $3 of assets per share and those assets are generating about a 25% - 30% return, by the end of the year it will probably be about $4 of assets per share.

Now at the moment cash earns about 2% or 3%, So assets that earn 25% - 30% are worth a lot more than their book value.

Even if you paid $7, for an FMG share today you are effectively paying $7 for $3.50 of assets that earn 25%, so their earning would be about 12.5% based your purchase price, which is 4 times what you would get with cash.

Even the last 12months dividend alone (ignoring retained earnings) is double what you get in a cash investment.

So I can't see how it is over valued at $5.50 as you claimed, this company is building equity every day, and returning a bunch of it to shareholders through dividends, and repaying debt with the rest saving interest and building equity.

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That's completely flawed.

You're comparing the returns from an equity position (which has high risk, no not FMG, the entire market) to a cash return that is effectively risk free.

Stocks typically have 10-12% cost of equity. You can't use a cash like rate on a stock.

FMG Price at posting: $5.22 Sentiment: Sell Disclosure: Held
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(20min delay)
Last $27.24		Change 0.300(1.11%)		Mkt cap ! $83.87B

Open	High	Low	Value	Volume
$27.33	$27.50	$27.16	$96.28M	3.521M

Buyers (Bids)

No.	Vol.	Price($)
1	976	$27.24

Sellers (Offers)

Price($)	Vol.	No.
$27.27	2423	2

View Market Depth

No.	Vol.	Price($)
1	15	28.600
1	3	28.050
1	51	28.000
2	214	27.750
2	1709	27.740

Price($)	Vol.	No.
25.880	17309	3
26.350	6	1
26.970	35	1
27.100	1200	1
27.200	387	3

Last trade - 16.10pm 20/05/2024 (20 minute delay)


Last $27.29			Change 0.300 ( 0.81 %)
Open	High		Low	Volume
$27.35	$27.50		$27.16	507006
Last updated 15.59pm 20/05/2024 ?

FMG (ASX) Chart