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12/07/17
13:52
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Originally posted by ConcerndCitizen
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That's one of those questions that never has a satisfactory answer. Even the most well-thought-out answer is ultimately meaningless, as the market rarely reacts as you expect - although you can pick the trends.
The calculations I've done say that @ 23c, RVR is trading on a fully diluted PE of 4.1 (price-to-earnings ratio).
Based on the following:
- LOM revenue of A$628m in the restart study
- Annual free cash flow of A$25m in the restart study (pre-teax)
- Current LOM revenue of A$699 (accurate as of 11:35am WST today)
- 699 / 628 * 25 = $A27.8m adjusted free cash flow
- 472m shares on issue + 24m options
- Current SP of $0.23
- PE = 0.23 * 496m / 27.8m = 4.1
A PE of 5 (fully diluted) would give RVR a "fair price" of 28.1c.
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Perhaps a better way of looking at it - RVR had a PE of 4.8 on Feb 13, 14, 15, 16 & 28, 2017 - the highest it's traded at in the past year (I haven't looked further back that).
PE of 4.8 today would be 26.9c.