We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
"everyone is predicting another crash"
Another hedged wild exaggeration....
Best of luck shareholders. There is plenty of life in this stock yet...
hedged
Share valuation isn't just about the financials - sentiment and potential have to be added.
If it was just about the financials, valuations would be easy, but adding the variables often means they defy logic and the valuation becomes a matter of opinion with the herd mentality playing a big part - even with institutional investors.
I don't short stocks. However, everyone is predicting another crash so there will be plenty of opportunities to short across a lot of stocks.
I will personally wait for a bottom to buy in if such an event happened.
Fair enough hedged. The market strongly disagrees with your valuation. Let's see how things pan out from here. If you are very strong in your view of course you should make some cash out of it. Go heavily short and declare it on this board..
If I have to be totally honest, I would value Ocado at less than £10 easily.
In terms of methodology we cannot use DDM or DCF unless we use CFO. In terms of relative metrics we cannot use PE but P/S is still too high. It should be no higher than 1.5 but is currently closer to 4.
To add to my note there is also the issue of staff burn out. With the immense pandemic challenges that Ocado employees have faced and overcome to ask them to work even harder on a new overseas contract may have been thought of as too much and too risky. Recruiting and training new employees in another new overseas location during covid is also very complex.
I think they've looked at the eggs in their basket and thought let's look after and nurture these rather than laying more and increasing the strain which must have been near breaking point.
Ocado's financing has been managed exquisitely well. Raising £1bill in June 2020 was a masterstroke. Locking in low rates of financing at a time when demand was at its height and there were few worries over a new contract. Tim Steiner, being an ex bond market dealer at Goldman Sachs, knew how important it was to raise then.
yes anything sub 20 is a good buying opportunity.......i still expect 30+ in the long term
Thanks all. I agree with you re a contract expectation this year shaggers. A large grocer in Italy or South Korea I view as most probable next contract signings. Countries with highest labour rates have been focussed on so far by Ocado in terms of international contracts as Ocado's solution results in largest cost saves in those geographies.
I believe the Ocado share price to be good value currently as it is discounting future expansion possibilities for the Ocado group.
what is your valuation then hedged??
I agree. Excellent review.
What valuation would everyone apply to Ocado?
I agree with the others an excellent review value, intelligent and encouraging.
What are the challenges ahead?
Yes, I would certainly agree, an excellent review Valueplay, your insight is of great value to this forum - Thank you.
https://s3-us-west-1.amazonaws.com/ptab-filings%2FIPR2021-00798%2F1003
excellent review value and i have nothing to add except i think the next overseas contract will almost certainly be this year and less certainly be in southern europe ....no doubt the doomsters will try and pick your review to pieces with the usual no profit no divi no this no that blah blah blah arguements.....something i wont have to read since ive started filtering lol
If a new Ocado Solutions contract for a large grocer in a medium sized European country was announced then I can see a straight 15/20%+ added to the SP and then it would rise further. That contract in itself would be small but the realization and confirmation that Ocado was still in demand from others would drive a spike in the shares.
The last overseas contract, Aeon Japan, was signed in Nov 2019. I think the major reason for a delay in a new contract is the difficulties and strain the pandemic has placed on Ocado
I have followed Ocado for many years - listened to all the results releases, researched daily, read all the interviews, seen all the videos etc. The very strong impression I get of Ocado as a company is that when they have a task they want to do it well and meet / exceed expectations. I think this philosophy was heightened after the warehouse fire. Some mistakes were made there. Out of the fire came a strengthened company mindset to be complete and thorough in all they do.
The pandemic arrived in 2020. March 2020 was when it's reality was hitting the UK. It placed colossal strain on Ocado retail. Tim Steiner outlined that it was as if the website was under cyberattack. So many trying to access the site that the Ai pointed to a major threat. Covid has placed huge strains on supply chains, delivery drivers availability, website functionality etc etc. So though Covid has helped the profitability of Ocado retail Ocado have had to devote a lot of extra time and resource to meet the enormous demand complexities of migrating off Waitrose and bringing in Marks and Spencers in the middle of a major pandemic
Ocado know as an absolute priority they have to bed down the Marks & Spencers joint venture well. There is much focus internationally on the venture and it is their most complete shop window to the world, showing other grocers what sort of technology they could have in their country if they too partnered with Ocado.
Other Ocado solutions partnerships around the world in France (Casino), USA (Kroger), Australia (Coles) Canada (Sobeys) Sweden (ICA), Japan (Aeon) Spain (Bon Preu) UK (Morrison's) are critically important too. During the pandemic each of these partners would likely have placed considerable extra demand on Ocado. Asking them for additional tech help in facilitating click and collect for example - Kroger, Sobeys Morrisons and Casino have certainly used Ocado's tech for this purpose for the first time in 2020. ICA have used additional Ocado tech in dark store development aside from the CFC capacity they are building with Ocado.
Part 2 - continued....
The CFC builds around the world would have hit considerable covid obstacles. Supply chains for parts, travel bans, covid absences, lockdowns etc. To continue to develop these CFCs and build them out on time would have been a considerable strain but Ocado have managed this.
I think throughout the pandemic Ocado have prioritized meeting the additional needs of their existing customers over attracting new ones. They do this knowing that happy customers will breed further success. The overseas contracts are also a shop window for Ocado. If there were considerable CFC build delays etc then the fallout would be very damaging as other potential customers would seek alternative solutions. Media headlines of unhappy Ocado partnerships would be deeply damaging.
It can be frustrating from a shareholder view because us shareholders and the market loves new contract announcements however for the overall health and growth of the company I think Ocado have chosen a safety first approach to the pandemic. Meet the considerable demands from existing partners, keep in contact with potential new partners but not commit to new contracts until major covid obstacles are removed i.e. travel bans, lockdowns around the world, staff shortage issues. I believe in the months to come another new overseas contract will be signed.
The above represents simply represents my thoughts, as always do your own research.
Anyone have any comments on this?