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You're welcome Mark.
Thanks for the info Velo ; )
markinvestor @
" Morning All, Anyone know when LSE are going to update to the current P/E Ratio for SLP? "
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Yes, once a year, every September when the finals are published.
It's a free site so all you're ever going to see on this site are historic P/E ratios, based on the previous year's earnings. That's why their P/E looks so high.
Simon from the IC and all on here who ruminate on the likely true valuation are incorporating the likely year-end earnings which are usually seriously well up on last year's, as they have done for the past half dozen years.
So, LSE is out of date historic.
Inv Chron et al, are into forward P/E ratios.
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Luna - thanks for that link. It does say 'historical key ratio chart' which explains why I think the P/E ratios on there look a bit high; they're historic, not forwards. ie., Not based on this year's likely earnings, but the previous year's last set of accounts (see reply above to Mark).
Sirus50 - again, same response as all above - P/E's based on outdated last year's accounts so all figures look far too high. I'm seeing far lower using forward P/E ratio's based on the current earnings/likely year-end earnings.
Also thank you for showing the reply from the prof. I counted at least 2 mentions of his work being based on the sectors - not the industries.
Sector P/E's are entirely different. We need the smaller universe of industry averages only .
Sector averages are too far ranging, too wide as they encompass a wide range of industries within each sector. So again P/E ratios looking too high. Plus they are historic. I have the forward P/E ratio for the industry that SLP inhabits much less. If I looked up the "sector" only average I guess it would tie in with the prof etc.,
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Stoodio - Intraday high was 141.50p not 143
- The intraday high showing on this site (above) is usually quite accurate once the first half hour computer glitches have settled down. LondonStockExch is showing intraday high as 141.5 too.
And he responded (within an hour): [ I told you he was Quality]
PE ratios are notoriously unstable, and if commodity prices drop and earnings collapse, PE ratios will move towards infinity before becoming not meaningful. I just report the aggregated PE for the sector, and if a lot of companies in the sector are losing money, the PE ratio will rise to levels that seem absurd. The answer is to not take issue with the PE ratio but to not use it in these sectors. Go with EV to Sales or EV to Invested Capital or EV to EBITDA to get more meaningful valuations.
So there you have it !
S
Thanks
I pinged him for a clarification.
Will update if he responds!
S
Found a public source for mining sector ratios etc...
https://www.gurufocus.com/industry_overview.php?industry=Metals-and-Mining®ion=UK
Confirms PE for 13 (well 12.51)
Well Sirius, if he's an academic then he would most certainly publish his data... So that should not be a problem. But that's not the issue here. You'll find that at least a few UK sites would have the median PE around that figure. And one could argue that this is a figure which future investors may be prepared to pay for SLP. I'm sure it makes a lot of sense. SLP at a PE of 13 is not exactly a radical suggestion.
In the meantime, I'll let the dear professor battle the bulls and bears on Wall Street :)
I agree Luna, I thought it was a typo. He is the world`s leading authority on valuation (teaches at Stern). Think that is fair to say. His MBA valuation and corporate finance classes are available on YouTube. They are a joy to watch, if a little "challenging". The detail is really quite something to behold. He really is something special and clearly does not find Wall St in the lease bit attractive and has the tools to dismantle their sharp-practice valuations and happily does so.
If his data cannot be trusted then frankly no-one`s can. Still I would be interested to see the breakdown of the 1620 and I might just ask him. He probably gets 000s of email a day but if you don`t try etc !
Sirius,
I used LSE only. Maybe that is global? Or just a mistake? That's a huge discrepancy. PE of 175 in this sector would be what I call 'irrationaly exhuberant'.
Are you sure you trust this data?
Shows how subjective this can be!
E.g. if we look at Prof. Damodaran`s spreadsheet admittedly dating from March 2020 (freely available) he sets out the trailing PE of 1,620 metals and mining sector stocks. The industry average trailing PE was according to his data - get ready for this lol - 175!
S
That's why I am always with joy when the price tumbles ;) I treat this like a high interest savings account. When the price goes down, my interest has just gone up! Loved it when it got discounted to 30p last year.
FYI - for that EPS Graham formula says £10.- Let's wait and see. Nobody knows what the longer term situation will be, but one thing is certain, it's very good value for money right now. Difficult to find a position as good.
Jesus Christ this hits £7 I’m buying you all a riverside stilt house on the wonderful Thai island of Koh Lanta and we will all be neighbors chewing the fat while watching then waves gently lap under earth our houses. Protein pancakes will also be on my between hours of 7-10am.
Consider the metals and mining sector average PE of 13. Now, if SLP would trade at that ratio and we take the 2022 forecast of 54.7pps into acount, then you would get a price of 711p. Thus a valuation of £7 is a rather realistic prospect. It's the magic of compounding :)
Sirius, Luna, this is hilarious. Very strangely we are all seemingly very like minded of value propositions. See my top line 3 year valuation of £4.30 just below your post of your own fair value Graham formula being that of £4.35.
I dont for one second believe this is coincidence. I thin what it represents is varying background individuals mindful of a stock and it's prospects and all thinking along similar lines. I know none of you. But it's a pleasure sharing thoughts and musings with every single one of you guys, really. Thank you all.
Luna it's funny you say, it might just be the caffeine but I toyed with the idea of asking anyone who's interested if they wanted to join a what's app group for this stock. But I think that's a little much. Would just be to get to know each other a little further and discuss the merits of this gorgeous investment.
Can I just point out that I would like to reiterate my appreciation for the new board. Since Terry left I was a little unsure, but I'd like to thank you for your transparency and updates. You used to be crap in fairness, but you've sharpened things up somewhat and I for one, as long term investor am really happy with what your approach.
should have said "so I kept the old one to make estimates less enthusiastic" --- love it how one cannot correct one's posts.
The only thing one can establish with a degree of certainty, is the current value of a business. Valuation for investment purposes aim to calculate the incalculable, namely what is the value in a future point in time? Nobody knows. Thus, all these exercises are estimates, and I treat them as such.
Even with current data, valuations are rather subjective. What multiple shall I pay for that company? If that company is a competitor or will enhance your business proposition, higher multiples are often not problematic at all. Usually, people use five years earnings as a starting point...
For investors, a relative comparision, like what is my sector's typical PE and at what rate do I _estimate_ the business to grow at over a time-period? Again, rather fuzzy figures and estimates. Simply projecting eps growth at a sensible rate with a given PE will do (you can do at DCF but I prefer to quickly work out these ranges in my head).
I am using a slighly obscure formula from Ben Graham, which served me well for decades. A growth rate of 5% is realistic (not in the current climate, but overall I'd be thrilled if a business can achieve that year over year at infinitum), and I also compare it to the current 20yr gvt bond rate (which is too low this time, so I kept the old one to make estimates less realistic -- lower bond rates make securities more attractive to investors) of 2.8%. This currently puts the fair value at around 435p.
And because these are estimates, I take a 50% margin of safety -- which makes it a buy for under 217p.
It takes only a minute to do.
That's why I actually don't like it when the share price explodes because a value proposition with this outlook over the next three years is extremely rare. It currently makes a lot of sense to still build a meaningful position.
There are other filters I use, but that one is always a good starting point ;) All estimates, but I prefer the conservative approach. My screens only ever return a handful of stocks anyway...
Happy investing.
The Wall St. valuation implies 15.19% growth each year for next 5 years followed by 9.5% growth each year for the 5 years after that with a terminal multiple of 20 with a discount rate of 14.85%.
So those growth figures are not outlandish to be fair but personally I`d treat them with extreme caution. If the discount rate/cost of equity is lowered to (say) 10% then with 5% growth for the next 5 years and then falling to say 3% for the following 5 (with a terminal multiple) of 10 the fair value is £3.87. (My own cautious, conservative price is around the £2.50 mark.) If we used discount rates like Goldman, MS et al, of (say) 8% - 9% the valuation is off the chart.
I keep breaking my own rules with SLP. First it was the 10% rule. Then I moved it up to 20% no 1 holding.
Now, after seeing that the market is valuing zero growth (in fact negative) even with a whopping 20% cost of equity I`m minded to follow Buffett's not so talked about rule of always be prepared to break your own rules.
We all know the all time high`s in PGMs won`t stay that way for indefinitely but they dont have to. Even assuming fairly flat or no growth at all, SLP is STILL undervalued! I`m lucky to have some cash lying around and cannot see a better alternative than SLP even at its all time high. And I know that sounds mad... but there it is!
It is a pleasure to be here with you lot. Such a knowledgeable crowd.
S
Morning All, Anyone know when LSE are going to update to the current P/E Ratio for SLP?
£7.09 I mean, thats fine too I spose :)
I don't also mind coming clean on a relatively precise 36 month term valuation here I have either, it sit's around the £4.30 mark to be precise. The only problem I struggle with on my slightly longer term, higher valuations are that other external factors begin to have far more weight and prominence in decision making. Ho hum, not a bad thing, just makes it tricky for a clut like me to think with absolute accuracy.
Australian based website - produces a snowflake dashboard for stocks, so in theory you get a balanced view on stocks.
The valuations themselves are a little less transparent in how they reach their numbers.
Jeeper zeepers Velo squire, top of the morn to ya FYI.
In fairness, I have seen simply Wall Street calcs before but wheats assumed it was a bit of a nonsense website but I stand to be fully and unequivocally out to rights here. What’s the site all about? Who’s behind it? And like you said, do they ever get sh it right?
FYI I did only say £2.38 was “one of” my higher end valuations :)
What's annoying with Simply Wall St, is that you can't see the history of their valuation calcs. to work out what assumptions they're updating and therefore what triggers the increase in fair value.
Still, raises some eyebrows for the fact that six months ago they had a FV of around £2.5, then up to £4.0, now it's jumped to £7.0...
Been over to Simply Wall Street for a look at their unbiased valuation in their DCF valuations for SLP, THS and JLP.
I grouped those because the latter two nearly always contain posts comparing themselves to SLP and bragging they should be valued better than SLP in the future.
Maybe so - so time for an outside party unbiased view. And for THS, they (Simply Wall Street) have it undervalued - and show a fair valuation of 193p
JLP they maintain as already over valued and show fair value as 17p
And SLP? Sit down first.
They state undervalued and show a fair value of £7.09 ! ! !
Let me repeat that in case you think I mistyped. They calculate fair value for SLP as £7.09
Now who sells extra large calculators? Because we need a big 'un. Our valuations are too low!
No wonder those two are always full of posts saying they are worth more than SLP
- they'be been keeping shtum about SLP's true and fair valuation LOL! :)
Watch JLP & THS posters say it's all wrong, and watch both of them agree on much higher valuations. Ha! And watch both of them downgrade SLP's valuation. Maybe they should be on the Bloomberg TV finance channels :)