Chiam asked 3 years ago
Hi KC / Peter,
I tried to redo valuation for Padini using latest data from Chartview. As of now, it seems that Padini is still fulfilling the conditions as of a good company. At the final step to determine if the price is a fair value, I see that the Implied EPS Growth is negative. Mathematically, I think it’s because the current EPS is already way more than estimated EPS. What does this mean financially?
Sorry, I’m really newbie in finance / stocks.
This is the Google Sheet link where I put in the numbers:
https://docs.google.com/spreadsheets/d/1fgAZvVEbynXZArWWJNSakLgM4CFTwE7W_faxALTZJqQ/edit?usp=sharing
KCLau Staff answered 3 years ago
Hi Chiam,
I looked at your spreadsheet, and you only use the PE in your valuation.
I don’t quite understand your question:
” I see that the Implied EPS Growth is negative. Mathematically, I think it’s because the current EPS is already way more than estimated EPS. What does this mean financially? “
What do you mean by that?
Try go through the checklist by following the links here:
Chiam answered 3 years ago
Hi KC,
I have just started and watched ‘Example of Good Company’ and I think not yet ready to submit stock analysis. Basically, I’m just going through the example exactly and compare if I do it correctly on my own. The problem was at the last step, the example (at that point of time) was the price (5.38) is still considered higher because it’s quite challenging to reach estimated EPS of 0.45 (P/E 12x) as company needs to have 87% growth of EPS from the current EPS 0.24. The current EPS now is already 11.42, so how to calculate growth? Is it that this company is not within preferred option based on P/E or EPS in the first place?
KCLauQuestion: How to calculate growth?
In the case of Padini, due to covid-19, there could be no growth for a year or two, until it is back to normal. I would assume no growth until further development.
Padini is a good company. But how the current situation is going to affect its business, you will need some judgement that none of us will be accurate. If it is too hard to see its effect, I will normally treat it as “too hard to know” and will skip.