A MICROSCOPE ON RETAILING. 22/8/12

9 Comments

1. 

   Andrew Legget
   August 28, 2012 at 9:31 am:

   Just going through the results of FLT which i have always been a fan of. Did i read the balance sheet and cash flow statement right which basically says that they have over $1 billion in cash and equivalents? At least we know this company should be fairly liquid and safe from a cash problem.

   I went over all the travel related ASX companies when i tested my competitive advantage identifier a while ago and one thing that came up was the amount of free cash these companies generate and low gearing a lot of these companies have.

2. 

   ashley.little.581
   August 27, 2012 at 11:24 pm:

   ARB Founder is selling down. and not mickey mouse number

   Huge eyebrow raise for me

   Cheers

   • 

     zoran arnautovic
     August 28, 2012 at 7:08 am:

     ARB
     Yes,I saw that and I think I made history ” This is the first time I sold all my ARB before Roger”

     Cheers

3. 

   Steve Moriarty
   August 27, 2012 at 4:37 pm:

   I think I remember seeing that JBH was planning to enter the music instruments business.

   I see that Allens Billy Hyde went into administration and whether this would present any opportunities for JBH to enter the sector. Maybe pick up some cheap instruments or locations etc etc.

   regards
   Steve

4. 

   Andrew Legget
   August 23, 2012 at 12:59 pm:

   Roger, has your phone be rinigng a lot today from journalists seeking comment about “what went wrong with Qantas?”

   The simple answer is “It’s an airline”.

5. 

   Andrew Legget
   August 23, 2012 at 12:15 pm:

   Interesting thoughts Roger, i always follow JBH as i like its business model (however one still needs to ask whether that business model is still as strong today as it was previously). I was very interested to hear the results from the price comparison exercise, it conflicted with my observations but mine were no-where near the scale of yours i would imagine and took into account only a few items.

   I have long wondered what will happen when the aussie dollar drops and what this will mean for the listed retailers (Myer excluded, don’t need to worry about them). The dollar will drop at some point and with what appears a slow down on the resources front it could be happening soon.

   I also was interested to hear the belief that bricks and mortar retailers will rule the web when they eventually get around to focusing on it due to their advantages in scale and the ability to walk into a store and refund an item rather than send it back by post. It makes sense but i think before they start talking about their potential internet dominance they need to get started seriously on their net stores first as they are already about 5 years behind. Also, as people become perhaps time poor internet retailing will only grow even more popular so if they don’t get a wriggle on then current players will just entrench their position.

   I believe that margins for JBH will again have pressure put on it by competition and price deflation in certain lines so it will be a tough little period yet. Hopefully for JBH Apple and Samsung bring out some new products that generate the same buzz as previously as that will give them a bit of a kick for a year or so.

6. 

   garry hawthorne
   August 23, 2012 at 11:09 am:

   Is there a method to use eps forecasts to help calculate future intrinsic value?
   i’ve worked through Valuable book and understand and can apply the intrinsic value tables. However, yet to find a valuation exceeding current price or close enough to suggest worth monitoring that stock. How can eps forecasts be used to calculate future intrinsic value. Or is there a better method?
   Also i manage a modest smsf. Is 9% desired return appropriate, given its tax rate of 15%.

   • 

     Andrew Legget
     August 23, 2012 at 12:27 pm:

     Hi Garry,

     Value.able should explain it in there. There is a way to use analyst forecasts for the future to come up with future valuations.

     DPS/EPS=Pay Out Ratio
     EPS/average of beginning and ending EQPS=ROE
     Ending Equity=Beginning Equity+EPS-DPS (there are some other steps but this is the generic version and should be fine for most).

     Hope that helps, i do future value forecasts a different way but i was using this for a bit and some of them came pretty colse to the reported figures.

     Just beware that as in any valuation technique what you get out is dependent on the quality of the inputs you put in and sometimes out there in analyst land (especially at the start of the year) they can be way off.

     Just some food for thought and have fun playing around and see what works for you. Roger’s book is about the best blue print i have seen for it.

     I don’t know if anyone other than you could answer the desired return question. It depends on how you come up with your required return.

     Looking at an interest rate comparison website i can get a savings loan with a rate of 5.75% basically risk free, Australian 10 yr government bonds are yielding 3.35% so i don’t know what you want to use as a risk free rate. I have never went below 10% and then most of mine are 12% but that is me and not you.

     • 

       garry hawthorne
       August 25, 2012 at 12:18 pm:

       Thanks very much Andrew. Your help has given me much to work with. Also thanks for the tip re early year forecasts.