Nervous times and only for the true believers. The big boys are doubling up thier bets revealed to the market by the major shareholder notices. It can't go any lower or can it ? Your only as good as your last EPS and that was 5.5 cps, we know the 2nd half is always stronger being generous let's assume an EPS of 8.5 ( this was achieved after the massive government stimlus, 9 months after DC, 20% of machines going to $2.50 and nett increase of 300 machines ) Clearly not a growth stock now, more an annuity stock, a PE of 12 is ample. Now the market will be remember the recent 1st half result of 5.5 , so for the 1st half 2011 let's say 7.5 , being generous again. That's a total forward EPS of 16. On a PE of 12 with a foward EPS of 16 that equates to $1.92. Clearly I'm extremely dissapointed with the results but maybe, with the market my expectations were too high. The capital returns were lovely and kept us in as holders. If management could give earnings guidance for 2011 and if this was an EPS of 20, there would be no risk of a dead cat bounce and I'd be buying as much stock as I could. Reason I switched stocks is there's a company that give's forward one year earnings guidance and have for the last 7 years always beaten the guidance.( telco stocks seem to do this for a reason I have yet to find out ) Stock was $1.90, EPS 19 for 2011 and dividend is 70% of NPAT ie 13 minimum cents fully franked + you scoop another 5 cents in OCT taking it to 18 cps, more likely 20. Similar price to CUS. The only unknown factor is what they beat the guidance by. So on PE of 12 ( massive growth ) that almost certainly $2.40 with another 18 cents in franked dividends ( note CUS div is unfranked ) total return of 36%. Kinda like I get my money back.
The question I pose is what are the factors that are going to drive the stock price to previous levels ? NZ announcement - may help lift the stock 5%. More branding deals ? What will be market anticipation be like for the next 6 months earnings report ? What's the market expecting EPS of 10 ? How will the market react to say 8.5 EPS ? Too many unkowns for me. When there was anticipation & expectation it was fabulous - what a great ride ! Now it's a grind
CUS Price at posting:
$2.01 Sentiment: None Disclosure: Held
