A Tale of Two Companies - JBH vs. CPR

[Rainmaker2000]

So I was just doing some intensive valuation of Clive Peeters and thought why not compare to JB's as I knew JB acquired Clive Anthony's (yes, started up by the same Clive too).........and thought you may enjoy the tale of these two companies, albeit Peeter's does not sell CD's and stuff....

My first shock was JB's has gone up by $7 since I last looked a few months ago..........here are JB's earnings projections

2007 2008 2009 2010
EPS 38.1 53.1 67.2 80.9
DPS 11.0 15.0 19.8 24.4

Here is Clive Peeters

2007 2008 2009 2010
EPS 10.6 14.8 18.7 23.9
DPS 6.0 8.0 10.5 13.0

It's incredible that Peeter's are more optimistic than JB's.........since JB's now trades on a PE of 37 while Peeter's is PE 12

I know what you are thinking: JB's has a better chance of making it.........I'm not sure that I agree......for one thing JB is highly leveraged....number two, it growth has sure come a long way they are far bigger now while their pond they swim in is similar size.......JB's is now valued at 1.7 billion dollars while Clive Peeters is a mere $200 million cap........that means that to make the return you deserve on JBs, it needs to become a $4 billion dollar company while Clives become a more 400 cap

I'm probably more inclined to swing to Peeter's ability to deliver the earnings........Don't agree..........let's take a look at the two Clive's for interest

JB's bought Clive Anthony's. 70% for $24 million in 2004 and 30% for $7 million this year. In a tough market, Clive Anthony's has obviously been a major failure so far for JB's, otherwise why would the second part of the business actually cost less in 2007...........

Peeter's on the other hand has apparently been booming apart from a slip up last year in the tough NSW market....

Now here's for a valuation delimma for you: Clive Anthony's may be doing pretty badly but as part of JB its profits are theoretically valued at 37x so on earnings of $3 million, that values this medicre business at about $111 million.......Peeter's, the far better performer, has a mere cap of $200 million even though it earned $13 million in a dissapointing last year....

JB is now overvalued but how undervalued is Clive Peeter's, that's the question......it's funny that people keep talking about retail, interest rates and debt and yet JBs with a mountain of debt itself is trading on 37x earnings.....head for the lifeboats while you still can I say

 

[nizar]

Re: Tale of Two Companies--JBH Vs CPR

JB is now overvalued but how undervalued is Clive Peeter's, that's the question......it's funny that people keep talking about retail, interest rates and debt and yet JBs with a mountain of debt itself is trading on 37x earnings.....head for the lifeboats while you still can I say

My trailing stop should look after me

 

[RichKid]

Re: Tale of Two Companies--JBH Vs CPR

So I was just doing some intensive valuation of Clive Peeters and thought why not compare to JB's as I knew JB acquired Clive Anthony's (yes, started up by the same Clive too).........and thought you may enjoy the tale of these two companies, albeit Peeter's does not sell CD's and stuff....
..........
.......
......

Now here's for a valuation delimma for you: Clive Anthony's may be doing pretty badly but as part of JB its profits are theoretically valued at 37x so on earnings of $3 million, that values this medicre business at about $111 million.......Peeter's, the far better performer, has a mere cap of $200 million even though it earned $13 million in a dissapointing last year....

JB is now overvalued but how undervalued is Clive Peeter's, that's the question......it's funny that people keep talking about retail, interest rates and debt and yet JBs with a mountain of debt itself is trading on 37x earnings.....head for the lifeboats while you still can I say

Interesting comparison Rainmaker. Thanks for posting it and for mentioning CPR.
Value pickers like Fat Prophets warned about JB's stock price going too far too fast a few months ago, they must be thinking more so atm. I'm not much of a fundamentals player so I looked at the chart and it looked like it had sufficient price momentum to continue upwards (that was a few months ago). Will have to check it out again soon to see if there's any evidence of exhaustion, sometimes overpriced stocks stay at price extremes for longer than expected.

 

[ROE]

Re: Tale of Two Companies--JBH Vs CPR

Dont need to be a genius to work out JBH is way way over priced.
At 37x earning for retailing, you got to do something extra ordinary to get 37% earning increase each year.

That my rule of thumb if they can increase earning for 37% a year they deserve a 37x Earning tag.

 

[reece55]

Re: Tale of Two Companies--JBH Vs CPR

The one question that I have always had for JB's is their inventory....

Anyone who has ever had a good look around the stores would note that they just have an incredible range of DVD's and other junk.... My question is, however much of this stock is never ever going to be sold....... In the past couple of years, they haven't taken a single hit as a provision for obsolescence, etc....

However, in general I would agree that this is a very over valued entity.... but did you see Capital Group creep up to 5% lately????

Cheers