Australian (ASX) Stock Market Forum

FGE - Forge Group

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Is fge undervalued? Fge has a price earnings of 10 PE. The market is 12 PE. Wouldnt you think fge would at least be the market PE. Considereing the market stocks are only expected to grow by 10 %. And forge has grown between 30 - 50 % the last few yrs. Usually companies with a growth rate of 30%+ have a price earning more closer to 20 than 10. Wierd
 
adds4 said:
Is fge undervalued? Fge has a price earnings of 10 PE. The market is 12 PE. Wouldnt you think fge would at least be the market PE. Considereing the market stocks are only expected to grow by 10 %. And forge has grown between 30 - 50 % the last few yrs. Usually companies with a growth rate of 30%+ have a price earning more closer to 20 than 10. Wierd
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Yes, you make an excellent point. I would say FGE is undervalued. It is as though the market is forecasting a flat profit this year. However, they have announced enough contract wins so I think the earnings will rise. Disclaimer: I have held for a while.
 
adds4 said:
Is fge undervalued? Fge has a price earnings of 10 PE. The market is 12 PE. Wouldnt you think fge would at least be the market PE. Considereing the market stocks are only expected to grow by 10 %. And forge has grown between 30 - 50 % the last few yrs. Usually companies with a growth rate of 30%+ have a price earning more closer to 20 than 10. Wierd
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The whole market is undervalued not just forge. Everything is trading on fear becuase of the eurotrash. :banghead:
 
fanger said:
The whole market is undervalued not just forge. Everything is trading on fear becuase of the eurotrash. :banghead:
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Undervalue is a relative term isn't it...

With BHP trading at forward PE 9.5 it is hard to say what is undervalued. The like of Forge cannot really keep power ahead without commodity boom, and if the commodity boom will power ahead than you would probably say BHP is cheaper and safer.

FGE is certainly 'undervalued' on a longitudinal basis. i.e. compared to earning multiples achievable in boom times. But when will that be and what earnings will they have at that time?
 
skc said:
Undervalue is a relative term isn't it...

With BHP trading at forward PE 9.5 it is hard to say what is undervalued. The like of Forge cannot really keep power ahead without commodity boom, and if the commodity boom will power ahead than you would probably say BHP is cheaper and safer.

FGE is certainly 'undervalued' on a longitudinal basis. i.e. compared to earning multiples achievable in boom times. But when will that be and what earnings will they have at that time?
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Indeed. 6 Months ago the market was willing to pay a much bigger premium in the mining services space, that has all changed now with the realisation that these are not, despite what some may think, sure things but lumpy contracting businesses.
 
Theres a company ive shares in with a PE Ratio thats in the vicinity of 6 right at the moment.
I bought it at a few cents more than what its worth now as it was hugely under my estimated Intrinsic Value for it.
Over the last 11 years its had a steady increase in EPS and Dividend.

This is the part I dont get and I guess its market fear, but If you were to buy the share at todays price and regardless of any capital growth, the yearly dividend payout makes the return of 10%.
Pretty damn good considering;
a) Much higher return than the banks, &
b) Dividend is 100% Franked
 
zac said:
Theres a company ive shares in with a PE Ratio thats in the vicinity of 6 right at the moment.
I bought it at a few cents more than what its worth now as it was hugely under my estimated Intrinsic Value for it.
Over the last 11 years its had a steady increase in EPS and Dividend.

This is the part I dont get and I guess its market fear, but If you were to buy the share at todays price and regardless of any capital growth, the yearly dividend payout makes the return of 10%.
Pretty damn good considering;
a) Much higher return than the banks, &
b) Dividend is 100% Franked
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whats the company called with a pe of 6?
 
Earnings upgrade should be coming out the next month. Forge have a habit of upgrading profit and annoucing a couple of contract wins this time of yr. Oct/nov and mar/april every year the earnings upgrades come out. Usually get some great share price movement in those months
 
robusta said:
Well this is interesting

http://www.asx.com.au/asxpdf/20111021/pdf/421xk3s703k7yl.pdf

Page 25 of the presentation FGE may have finally found a business worth buying.
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I hope its a company like calibre global, the cfo's old employer, calibre would be a perfect fit. Its owned by a hedge fund, who no doubt would want to unload their investment for a profit. That would be a company transforming transaction, the company would definitely become a teir 1 contactor over night, with access to calibre globals workforce and sales
 
adds4 said:
I hope its a company like calibre global, the cfo's old employer, calibre would be a perfect fit. Its owned by a hedge fund, who no doubt would want to unload their investment for a profit. That would be a company transforming transaction, the company would definitely become a teir 1 contactor over night, with access to calibre globals workforce and sales
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The hedge fund is first reserve corporation
 
Looks like i was right. Forge will take over clough. Not clough taking over forge. The sale of the marine business makes clough more appealing to forge.

"Clough’s major shareholder, South African Murray & Roberts, which holds a 62 per cent stake, said it was looking to sell all or part of their share"

"Last week, Perth engineering firm Clough, which owns a 33.4 per cent stake and joint venture with Forge, was rumoured to be a takeover target."
 
adds4 said:
Looks like i was right. Forge will take over clough. Not clough taking over forge. The sale of the marine business makes clough more appealing to forge.

"Clough’s major shareholder, South African Murray & Roberts, which holds a 62 per cent stake, said it was looking to sell all or part of their share"

"Last week, Perth engineering firm Clough, which owns a 33.4 per cent stake and joint venture with Forge, was rumoured to be a takeover target."
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Dont you think CLO would be in a trading halt by now if that was the case?
 
robusta said:
Dont you think CLO would be in a trading halt by now if that was the case?
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Exactly. If Murray & Roberts sell its CLO stake, corporate laws in Australia dictates (I think) that it must make a full takeover offer for the rest of CLO, and may trigger a downstream offer for FGE as well.
 

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