RE: Some big buys today12 Jan 2018 22:06
For most of the past 3 years since the flotation the market was happy to price Saga on a P/E around 15. EPS last year was 14.1p and is expected to be up by 1-2% this year before a fall of around 5% next year. Being pessimistic lets make that drop 7-8% which gives EPS around 13p. If the market had remained consistent with a P/E of 15 that still gives an SP of 195p. That's quite a difference to the current SP....Highlights how rogue the market is really. It is quite happy giving shares like BTG a P/E of 86, Just Eat a P/E of 70 or more, Abcam P/E 55 but others like this, WTB, SBRY, Centrica, SSE, UU (defensive big cap utilities) etc. a P/E around 10 is considered 'too high'.
Far too much premium is assigned to the word 'growth'.
Hikma pharmaceuticals was at 2600p earlier last year but as soon as it was deemed to no longer be a high-growth stock it crashed down to as low as 900p (65% drop!) - profits and revenues were actually up by 1% but this was deemed to not be 'enough'. Scary and totally mad.