Forum Archive Index - July 2001

[not important <cullen150@yahoo.com>]

Oh my gosh that is the most simplest yet most awesome
explaination of how to use a p/e ratio ever. It makes 
so much sense and is simple to work out. I have
followed arguments on p/e before to understand them
but some say high better some say low. Well that sums
it up perfectly. thanks for post that was great!!!!!
   thankfull cullen150  :)
ps) obviously low p/e is better here. is there
arguments for a high p/e though??????

--- Bruce Harris <bruce99@freemessage.com> wrote:
> Most of us would be content with a 15% return medium
> term. your valid question is how long they can
> sustain this dividend. You note that the PE is
> apparently 21. Others will have a better
> explanation, but how I use PEs is to divide them
> into 100- in this case giving a return in a profit
> sense of approximately 5%. I note that thier PE on
> the Direct Broking site is shown at about 48- i.e. a
> return of 2%. In either case they therefore fund
> most of their dividend out of reserves- this is not
> sustainable for a long period- unless their earnings
> increase. even at the PE of 20- or return of 5%-
> they will need to grow earnings 200% to fund the
> dividend out of profits. Or 100% if you are happy
> with 10%.
> Am not that familiar with the Akld commercial
> property market but doubt they will achieve that
> kind of growth. In fact there must be some sort of
> risk of a decline. Also the portfolio is not all
> that big so that management costs must be relatively
> high as a proportion of revenues.
> So up to you- but the 15% looks difficult to
> sustain- unless there's something about the company
> that is not obvious. Regards, Bruce
> 
> 
> Sign up for your FREEMessage account at 
> http://www.freemessage.com
> 
> 
>
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