established: 1859, ASX code: DKS, homepage: www.danks.com.au
Overview:
Danks Holding is a major Australian wholesale distributor of hardware. It trades from warehouses in Braeside VIC, Huntingwood NSW and Kewdale WA. The core business is done through through its HoME, Thrifty-Link and Plants Plus brands.
Analysis of 2006 financial results:
- Market Cap: Depending on the daily stock price the market cap of this company is about $50mil in about 6.5mil of outstanding shares.
- Shareholders Equity: $54.4mil making the stock’s book value approx. $8.37 per share (0.17% growth on FY2005). From that about $51.6mil. ($7.93 per share) is available working capital.
- Earnings per share: $0.46 making the average EPS growth in last 3 years about -17%
- Return on Equity: 5.5%, averaging about 7.7%pa in last 3 years
- Balance Sheet: Working capital of $51.6mil versus total debt of $13mil
Sharemaket’s valuation:
Average DKS’s Price to Earnings ratio of 13 suggests the share price around $6 ($0.46 EPS x 13 P/E)
VALUE STOCK:
Return: At the end of November 2006 at share price of $7.8 this company is trading at about 2% discount to its current working capital and at about 7% discount to its book value.
Pros and cons:
+++ Very strong balance sheet
+++ Long established company with about 49% management ownership
+++ Not issuing new shares
— Products for cyclical markets
— Low ROE => don’t hold for growth
Further information about Australian Stock Exchange www.asx.com.au
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