I can't understand how it can be a 'value trap' at these prices?
The company continues to earn (yes, real profits) at rates above the high teens. The following shows the last 8 ROEs, courtesy of Comsec.
Book value at 37 cents... Last earnings was 6.5 cents.
38.4, 24.2, 21.8, 35.6, 12.5, 29.0, 17.6, 17.4
I would rather the company earn at those rates than have the money myself to invest. Can you earn that much in a bank?
At 27.5 cents it is sitting around a current p/e of 4.2. Now either the earnings will drop significantly or the share price will rise, because at 4.2, it is showing a great misrepresentation of value. (Take a look at their report, especially the graphs, to see the trend.)
I had an understanding that it was expected to earn between 6 and 9 cents for 2012, but perhaps that was from a broker??? (If so, you can forget about that.)
This is a sparkling gem...
But that of course is entirely my opinion.
:-)
FSA Price at posting:
27.5¢ Sentiment: LT Buy Disclosure: Held
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