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Cain Treanor

1,034 Posts.

169

13/04/17

09:51

Post #: 24048879
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Originally posted by APJAPJ ↑

I don't believe in calculating PE. It's about as useful as calculating a gdp

But I think a market cap of 90 million sounds reasonable

for a company which shows little revenue growth, zero pricing power and probably a long term profit figure of around 5m per year.

The debt level needs to be taken into account...

As does the fact that its cash flows are lumpy enough to basically not be forecastable over a 6 month period.

Massive swings from deficits to surpluses

I used to think 120m was fair value for this firm.

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So you don't think Price relates to earnings?

While I certainly don't believe there is a one size fits all PE valuation formula for all companies, I do believe PE is a useful tool in valuing businesses, you just have to figure out what PE is suitable based on expected growth and the companies position in its markets.

Anyway I happy to disagree with you, we will just have to wait until the full year results.

CZZ Price at posting: $14.50 Sentiment: Hold Disclosure: Held
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