Conundrum13 Aug 2018 23:29
Must confess, that after more than a year that this share has suffered from a huge retrace that there would be some undervalued assets on the balance sheet, or at least some financial metrics that offer opportunity for advancement, but I'm having a tough time finding any. PFG should be done with deep retracing and ready to make steady progress over the coming year - as intimated in last month's interim trading update.
But what I'm looking at on screen bears no relation to the market's positive reaction to H1's loss making trading report.
For instance, the year ended 2017 shows of course not a net profit but a loss of -£134.4m
So all good from now on, was the market's interim update perception. And It's supposed to be mine too, based on the researchers data on what happens after a company 'serves its time' after issuing a profit warning. But after the H1 loss making figures are poured in to the forward balance sheet, I appear to be looking at similar market forecasts for revenue - but not a net profit - but an even larger loss for the full year.
The market forecast for the full year is revenue of £1.135B and a net profit of £122.5m a great start to the recovery
- except I'm looking on screen at -£179.4m loss after those interim figures are taken in to account.
It's impossible to calculate any fundamental metrics to make a judgement, if a company posts a full year operating loss and a full year net loss, intead of a profit for both headings and most accounts or computers will throw up nonsense figures if forced to try (LSE shows a minus figure for the P/E ratio which is total nonsense - and not the computers fault). So the only way is to take the market forecast at face value and hey presto you have profit for the full year. And based on the forecasts the PE ratio comes out at P/E 11.1 which is low when compared to the FTSE
- but dismal when compared to the industrey sector average which is a very low P/E9.5 (and way above the PE10 year average) suggesting that even if the year ends as forecast, that the SP is expensive - and I was expecting to find it undervalued!
(The FTSE all share average is P/E13.5 but you have to compare like sector with sector).
Similarily, Price to book value is worse than the sector average, so is ROCE, ROE and operating margin. The figures are such a mess I must have this thing back to front. Last year an update came out, late August after the July interims and a further trading update in October. Will need the very latest in late August if they run the same update timescale again, as I'm torn two ways here. One the one hand I believe in the research that says PFG as part of a group of companies that issued profit warnings is now due for a reasonable re-rating, but on the other, after you allow for market forecast figures, the metrics still show no improvement.
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