CON­TIN­U­ING IN THE RIGHT DI­REC­TION

Finweek English Edition - - INVESTMENT -

EOH has been one of the dar­lings of the stock mar­ket with its one year re­turn around 70%, 385% over three years and just over 1 400% in five years. The ques­tion most of­ten asked is if it is ex­pen­sive.

Well, on a his­toric P/ E of 25 times, and a trad­ing up­date of­feri ng HEPS up 30%-35%, t he an­swer is no. A high P/ E is f ine as long as earn­ings growth re­main higher, ef­fec­tively re­sult­ing in a PEG ra­tio be­low one. PEG is P/E di­vided by earn­ings growth, and any­thing be­low one sug­gests value or an un­der­val­ued stock.

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