Another financial year older Blackmores Limited has recently announced its final results for the year ended 30 June 2007.

Since BKL is one of the stocks I already introduced here few months ago, I am not going to repeat myself and go directly into analyzing the latest numbers. If you are interested, look at the last year’s sums in Australia: Blackmores Limited

Analysis of 2007 financial results:

• Market Cap: Depending on the daily stock price the market cap of this company, the market capitalization is now around $344mil over pretty much the same amount of issued shares as last year ie. 16mil
• Shareholders Equity: $43.5mil making the stock’s book value approx. $2.72 per share (17.5% growth on FY2006). From that about $34.3mil. ($2.16 per share) is available working capital. That is about $6mil increase in total working capital (in other words about $0.38 per share).
• Earnings per share: $1.04 making the average EPS growth in last 3 years about 21%
• Return on Equity: 38.3%, averaging about 37.4%pa in last 3 years
• Balance Sheet: Working capital of $34.3mil versus total debt of $17mil

Sharemaket’s view:
Average BKL’s Price to Earnings ratio of 16.4 suggests the share price around $17 ($1.04 EPS x 16.4 P/E)

GROWTH STOCK:

• Conservative forecast of average EPS growth in next 10 years: 15%
• Share price in 10 years time: about $69 (EPS in year 10 based on forecasted yearly EPS growth times average P/E)
• Total shareholders return in 10 years times: $87 (share price of $69 plus $18 of the 10 years worth of dividends if the current payout ratio of 75% persists)
• Rate of Return in next 10 years based on beginning of September 2007 price of $21.5 per share: 15.1%pa

Pros and cons (no changes to my previous analysis):
+++ Long established market leader in its industry
+++ Establishing family still owns over 31% of shares
+++ Exceptional ROE year in year out, very reasonable levels of debt
— Low book per share values
— Trades on high P/E ratios => little margin of safety

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This entry was posted on Saturday, September 8th, 2007 at 3:20 pm and is filed under Australian stock. You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.