Calculating Intrinsic value – Book value


In a previous post, I briefly listed several methods of calculating the intrinsic value of a share. These included the following methods:-

  • Book Value Per Share
  • price = value
  • market multiples
  • True value as adjusted book value plus assessment of competitive advantage plus future growth
  • Roger Montgomery method
  • Brian McNiven / StockVal Method

Another method that I neglected to mention was Aswath Damodaran’s valuation method.

In today’s post, I’m going to discuss Book Value Per Share in more detail. I’ll discuss the others as well as Aswath Damodaran’s method in more detail in future blogs as each method deserves its own blog piece. Read more of this post


Billabong (BBG) – Is the current price an opportunity?

Billabong is in the business of marketing, distribution, and sale of apparel, accessories, eyewear, wetsuits and hardgoods in the surf, ski & board markets under various brands including Billabong, Element, Von Zipper, Honolua Surf Company, Kustom, Palmers Surf, Nixon, Tigerlily & DaKine.

Its been a darling of the Australian share market for years, but its performance is slipping. Net profits have slid each year for the last 3 years, and judging by analysts forecasts, there’s not going to be much improvement in the next 1-2 years either. The market has recognised this and the share price has fallen from over $17 down to $6.14 as at 20th May 2011. Read more of this post

Aristocrat Leisure (ALL)

Aristocrat produces, develops and distributes poker machines and poker machine software throughout Australia, NZ, Japan, South Africa, US & Europe.

I like the companies I invest in to be consistent. Aristocrat (ASX code: ALL) is not one of those companies. As much as I’d really like to invest in Aristocrat, performance over the last 10 years has been inconsistent. Net profits in 2010 were $77.2m – Aristocrat earnt $86m in profit in 2001, 10 years ago, and its earnings since then have been volatile, swinging from a loss in 2003 to a $247m profit in 2007 to a loss in 2009.
Aristocrat Financial Summary Read more of this post

Matrix Composites & Engineering (MCE)

Matrix Composites and Engineering (MCE)

With the share price increasing from $1 in Nov 2009 when Matrix first listed to around $7.50 today, means many analysts are calling it overpriced. What many are forgetting is that the stock listed way too cheaply during a bleak time in the market.  If the stock had listed at say $5.00, today’s price of $7.50 wouldn’t look as impressive.

Analysts are also looking at the PE ratio of around 18 and declaring it expensive, but PE ratios don’t take into account future growth. Revenues have almost doubled each year, from $54m in 2009, to $103m in 2010 and expected to be more than $200m in 2011. While that level of growth is not sustainable for long, I expect Matrix to keep posting impressive profits for a few years yet.

It still looks undervalued based on the outlook I see for the company. The most recent sell off from near $10 looks overdone, and looks like a wonderful opportunity.

Read more of this post

A review of the top 50 Australian stocks (S&P 50 Index)

Just for fun I thought I’d have a look at the 50 stocks in the S&P 50 Index, and do a quick review of each of the companies in it, to see how many I’d consider investing in based on trying to make better than average returns. To my surprise, almost half the stocks in the top 50 I’d consider as poor or at best average investments.

I can’t see most, if not all of the companies I’ve listed below generating an above average return on my investment. I’m aiming for at least a 10% return. Read more of this post

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