Forum Archive Index - October 2000

["P Maiden" <pmaiden@xtra.co.nz>]

Steve - you are right in that future earnings and cashflow are the things to look at to see where the share price might go.

 

The point I was trying to make with the ROE figures was that CAH is not adding to shareholder wealth.  If you took the economic cost of shareholder equity and applied it to the P&L there would be many years of negative earnings.

 

Short term the picture looks good. I'm sure that  the reported earnings this week will be pretty positive and this will be eventually lead to a full year result better than last years. They are doing some pretty positive things around supply chain activities and with the Carters store (even on-line). The only problem they have is that they grow trees that nobody seems to want.

 

On this basis the current price looks pretty attractive.

 

CAH last balance sheet had "Deposit Accounts" of $2.4 B. According to the notes $423K went to pay for an acquisition from CSR and they repaid debt of $994K (post balance date)

 

This still leaves $1 B - about 63 cents a share. (unless I have missed something)

 

Hope this is earning more than CAH have achieved in the past. No doubt that is why shareholders want it back.

 

Pretty compelling argument to buy at Fridays close of 157. Long way from a high in October 1997 but higher from where it was in October 1998.

 

Nearly talked myself into it - but I'll still sleep on it.

 

Peter