Q: Good morning
What is ATD's average Historical P/E ratio, say for the past 5 or 10 years?
What is the High and Low Historical P/E ratio, the range, during that time period?
Dividing ATD's current stock price of $69 by their reported net income per share of $2.72 yields a Historical P/E ratio of 25.4.
Am I doing what seems like a simple calculation correctly?
I ask because I am seeing a Future P/E ratio for ATD in the financial press of 17.3, which implies a large increase in net income compared with their last fiscal year, a decline in stock price, or some combination of the two,
How should one interpret this dramatic change in Future vs Historical P/E for ATD?
And finally, what is 5i's view on how expensive ATD's price is currently, compared with past history? Does 5i support accumulating ATD shares at this point?
Thank you.
Edward
What is ATD's average Historical P/E ratio, say for the past 5 or 10 years?
What is the High and Low Historical P/E ratio, the range, during that time period?
Dividing ATD's current stock price of $69 by their reported net income per share of $2.72 yields a Historical P/E ratio of 25.4.
Am I doing what seems like a simple calculation correctly?
I ask because I am seeing a Future P/E ratio for ATD in the financial press of 17.3, which implies a large increase in net income compared with their last fiscal year, a decline in stock price, or some combination of the two,
How should one interpret this dramatic change in Future vs Historical P/E for ATD?
And finally, what is 5i's view on how expensive ATD's price is currently, compared with past history? Does 5i support accumulating ATD shares at this point?
Thank you.
Edward
5i Research Answer:
For the past decade, the average (annual) has ranged from 16.3X (2022) to 25.2X (2016). Peak a and low for the decade: 31X (2015) and 12.9X (2020). The historical calculation is fine, but markets move on forward expectations, and forward P/E is 17X. The valuation has bounced around as investors deal with the uncertainty of the 7/11 acquisition, which has dragged on a long time now. But earnings growth is expected next year regardless. Based on its (very strong) history of creating value, we would continue to endorse the shares and would consider them cheap for a quality company. There are still lots of global acquisitions that can be considered and it has the capital available for deals.