Below are my thoughts about a ARI takeover. AGO has some similar characteristics
Using the same assumptions AGO's...
FY15 EV/EBIT = 5.4
Reuters FY15 EPS = 10.49 (15 analysts average)
*** ARI post ***
Looking back at 2012 it's share price was cheap/wrong below 0.90 and ridiculous below 0.80 cents. Hence a takeover offer 10 days after it fell below 60 cents.
Then, I would have accepted $1.50 and been happy given the risks and outlook. I suspect the company would have too.
Everything is different now. YES I think it is very possible now. Much more compelling at $1.90+
At Iron Ore 'average' of $US107 for FY15 and FY16 and no currency movement, ARI EPS = 22 cents. P/E = 4.5
Reuters FY15 EPS = 19.6 (14 analysts average)
So at $1.90 is only a P/E = 10
EV/EBIT = 6.5 (market is at 10!) 50% higher This is the most applicable metric and more useful than P/E
So a bargain at $1.90, is what I am saying.
Book Value = $2.85 so if you take it over at $1.90 you instantly make an accounting profit of 50% on the transaction.
The currency is 10% lower now than Sept 2012 which makes it 10% more attractive!
Iron ore Spot has only ever traded for 14 days now since spot started below $US100.
AGO Price at posting:
75.7¢ Sentiment: None Disclosure: Not Held
