This is a company that I was previously invested in and I was interested in the results, with making a decision going forward. I am not an accounting so when it comes to earnings and the PE it can be difficult to find a true sense of value for the company. Do we use total earnings, underlying earnings, thus basic Total EPS, Basic Underlying EPS, Basic Underlying EPS or Diluted Underlying EPS. So four versions of EPS.
Depending which ones to use then PE range from around 10 (cheap) to 24 (expensive). Personally I always look at the lowest earnings value so with a share price of 199p against Total diluted earnings of 8.32 then I have a PE of 24. So I rate as expensive.
So I guess this is a classic case where PE and Earnings is becoming a difficult way to value a company.
I can see why the Naked Trader pretty much ignores Earnings and PE valuation.
On his PPT against Mkt Cap I make it 21x, so this makes the company valuation more expensive
Health Hive Group Limited Acquisition
Net debt is high at 42.69 against exceeding 3 x pre-tax profit 11.89.
Net cash Outflow of 16m due
Adding back in the acquisition costs then the company was cash generative with what I calculate a Free cash Flow per Share of 11.45p, which would have covered the earnings of 8.32
The balance sheet is strong.
I think SIV is priced in and with increased debt and cash outflow I think this is not one to invest in for now.
If anyone can clarify to me the most accurate Earnings figure to use I would appreciate that.
Update: I notice Paul Scott written a review on SIV today and points out the balance sheet is not strong as follow:
Balance Sheet - this fails my testing, since net assets of £144.3m reduces to -£22.9m after the substantial goodwill & other intangible assets are written off. I just don't like investing in companies with negative net tangible assets, as they don't have enough financial strength to fall back on when times get hard. - See more at: http://www.stockopedia.com/content/small-cap-value-report-8-oct-2014-ezh-cto-siv-86857/#sthash.NKN8fkuj.dpuf
