I understand the issue of dividends but because of the marginal rate, I like companies investing in the business than paying out a dividend. So I do not think everyone values the dividend equally. There are numerous studies done showing there is no difference in the long term between dividend-paying companies and non paying companies. Most of them are done in the US so might not be comparable. I do think it is valuable for Australian investors (elections lost on the issue) unsure whether it is straightforward as you think.
I would like to take a PE of 15 which is close to its long-term median (15.32). Then the current value (22) is fair value. However, It has gone to low as 6 in a recessionary/ adverse environment. In fact, in 2020, revenue did decrease and margin came under pressure. We already know the Australian business is slowing (It still accounts for 80% of the revenue). Then the growth is coming from the USA I am very optimistic long-term, but in the short term would expect the operating expenses to go up, and margins to come down.
The current PEG ratio (PE/growth) is still over one. I think if the growth slows further current value has downside risk. Also, the stock market is a forward-looking creature.
That was the basis I thought sub 20 is fair value, but the sentiment might push the value down further. But thank you for bringing the value of dividends into the equation.
CCP Price at posting:
$22.38 Sentiment: Hold Disclosure: Held
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