FY19 EPS was 33c, which was almost unchanged from FY15, FY16 and FY18. So TGR's core salmon business isn't generating a lot of growth; that is not surprising as growth in consumer staples like food tend to be linked to population growth & inflation, both of which are very low.
FY19 DPS was 18c; on a $7 SP that would be a 2.5% yield. I don't believe anyone is going to buy a 2.5% yield on a low growth consumer staple stock. Repeat for wynneboy1's $5 target price and it's 3.6% yield, which is still a very low yield to accept for equity risk.
So in short, there's no chance of TGR getting to $7, and $5 looks tough as well, without growth coming from the prawn expansion. TGR believes the prawn expansion will deliver growth, but at the moment it constitutes a significant execution risk, so there's a limit on how much SP value it can add.
I'm optimistic TGR can execute well, but they are historically a salmon company with no prior prawn experience, so I don't fault the market for holding off assigning much value to the expansion until after TGR can demonstrate some successful production and start to give an accurate sense of what future earnings look like.
TGR Price at posting:
$4.44 Sentiment: Hold Disclosure: Held
