Good Morning traders and investors,
I'm starting to think that Quindell should employ me in their public/investor relations department, as all I seem to think about is Quindell.
I would encourage (as per usual) for people who struggle a little with understanding investing terms along with their pros and cons to have a quick glance at this old post of mine on defining terms:
http://themaskedstocktrader.blogspot.co.uk/2014/07/understanding-ratios-definitions.html
So, here's another look at the value Quindell is offering you numerically at these current prices:
1. PE Ratio:
Taking the current share price of 145p, Quindell is offering a low PE ratio (taking the headline - adjusted EPS) of 3.8 based on the 2013 full year results and a staggeringly low PE ratio between 2.5 and 2.35 based on the official expected EPS range of 57.7-61.7p listed in Quindell's latest release.
Based on the 2013 full year PE ratio, Quindell is currently in about 90th place of the 1209 (according to my data) companies that actually have PE ratios above 0 and on a forward basis for the end of 2014 it comes in a strong 43rd based on the top end EPS and 45th based on the lower EPS estimate.
2. PEG Ratio:
For this ratio I am going to use the forward upper end figure (mainly to save me some time, but also because Quindell have a habit of beating their goals significantly, so I feel that using the lower figures is a bit pointless.
Doing this we find that Quindell is on a forward Price Earnings Growth figure of 0.0379.
Now, that looks wrong but I assure you it isn't, it just happens to be that Quindell is currently priced very low in the market (PEG<1 and the share is priced cheaply in the market).
3. Price to Book Ratio:
Taking a half year net asset book value per share (this seems fair as it limits the counterarguments that are debt related), we get a net book value per share of 0.68, which is a bit ridiculous really, because not only are you currently paying less than the net asset value of the company for shares this figure is also only based on half yearly results and as well all know Quindell went cash positive in July, so much of that debt will have been reduced, putting Quindell in reality much closer to 0.5 and potentially below.
4. Price to Sales Ratio:
Running on the 2013 full year results we got a price to sales ratio of 1.58, but this is high in comparison to the expected 2014 full year price to sales ratio of 0.87.
The beauty of using this ratio in the case of Quindell is that gross sales are very hard to manipulate and the majority of the negative view points regarding the company seem to come from this (poor and unoriginal) direction.
It's worth pointing out that statistically firms with price to sales ratios below one tend to show strong future upwards share price growth.
5. Dividends:
I didn't really want to discuss dividends much because it won't be long before we're made aware of the company's plans regarding this, but considering that the last dividend (in post consolidation prices) was 1.5p, this gives a current dividend yield of 1.03% at the current share price, but when you consider how fast the company has grown and the fact that it will be taking £1,000,000 of cash per day in the fourth quarter of 2014, the dividend yield potential at these current prices could be massive.
To conclude, I think I simply have to conclude as I normally do, that Quindell remains staggeringly undervalued in this current price range and in ranges significantly above it's current price. It looks as if I'm just going to have to wait and add to my position where possible and allow the market to slowly wake up to what (in my humble opinion) is a company with huge further potential for both dividend and share price growth.
All the Best
The Masked AIM Trader.
Sources:
http://www.quindell.com/images/uploads/irdownloads2014/20140821_IR.pdf
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