At the moment SSM is trading at a forward P/E of 7.5, 40% below its peers, according to the AFR last weekend. Depending on when they recognised the revenue, the NBN component of that is negligible if not nil, from earnings for the first half.
Of course future NBN work would give the stock a significant boost, but clearly there is nothing built in to the price for this work, and it remains undervalued. In fact, the stock has been undervalued for years, in my opinion, based on standard earnings multiples. I've no idea why, but I think there remains significant upside. They have a diversity of contracts, which seem to be regularly renewed, so I can't fathom why it trades at a discount.
The bottom line is that I'm sticking with the stock for a while yet, and wouldn't be surprised to see the share price to be north of $1 in twelve months time.
SSM Price at posting:
55.4¢ Sentiment: Hold Disclosure: Held
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