01
01
2007
Australia: GUD Holdings Limited 2006 financial results analysis
Posted by: dk in Australian stockestablished: 1955, ASX code: GUD, homepage: www.gud.com.au
Overview:
GUD Ltd. is a manufacturing and retailing group involved in four kinds of products (FY 2006):
- Consumer Products (brands Sunbeam, Victa, Oates Clean) responsible for about 60% of total revenue
- Water Products (Spa Quip, Davey, Monarch Pools) about 21% of total revenue
- Automotive Products (brands Ryco, Wesfil) making about 15% of total revenue
- Security Products (Lock Focus) about 3% of total revenue
Analysis of 2006 financial results:
- Market Cap: Depending on the daily stock price the market cap of this company is about $420mil in about 60mil of outstanding shares.
- Shareholders Equity: $141.4mil making the stock’s book value approx. $2.36 per share (4.74% growth on FY2005). From that about $65mil. ($1.08 per share) is available working capital.
- Earnings per share: $0.67 making the average EPS growth in last 3 years about 27%
- Return on Equity: 28.4%, averaging over 25% in last 3 years
- Balance Sheet: Working capital of $65mil versus total debt of $71.1mil
Sharemaket’s valuation:
Average GUD’s Price to Earnings ratio of 11 suggests the share price around $7.37 ($0.67 EPS x 11 P/E)
GROWTH STOCK:
- Conservative forecast of average EPS growth in next 10 years: 13.5%
- Share price in 10 years time: about $26 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
- Total shareholders return in 10 years times: $38 (share price of $26 plus $12 of all the dividends if current payout ratio of 80% persists)
- Rate of Return in next 10 years based on end of November 2006 price of $8.1 per share: 16.72%pa
Pros and cons:
+++ Strong balance sheet
+++ ROE
+++ Not issuing new shares
— Management only holds 0.6% of the company
— Products for cyclical markets
Further information about Australian Stock Exchange www.asx.com.au
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