I have been looking at MTO's valuation into further details.
Given the cyclicity of their business, it is probably more logical to look at their average return on equity over a cycle.
Looking at the last 5 years, MTO had an average ROE of 13.2 % (excluding the impact of goodwill impairment in FY 20).
Such a ROE can justify a price/book of 1.89 if we take a cost of equity of 7 %.
As a result, I get a target price of 4.25 $ using this valuation approach.
Like every valuation method, it is subjective and depend in particular on the assumption we take for cost of equity and possible changes for ROE over different cycles.
Looks cheap, page-3
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Last
$1.63 |
Change
0.010(0.62%) |
Mkt cap ! $120.3M | |||
| Open | High | Low | Value | Volume |
| $1.61 | $1.63 | $1.61 | $11.35K | 7.04K |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 5168 | $1.61 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $1.63 | 19999 | 1 |
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| Last trade - 16.10pm 15/11/2024 (20 minute delay) ? |
| MTO (ASX) Chart |