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Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: deeiche1 who wrote (503)	4/4/2008 3:17:48 PM
From: bruwin	Read Replies (2) \| Respond to of 4720

Hi there deeiche, ... so you "found me" !! One or two observations about the numbers you've posted regarding GRC. According to its latest set of Financial Results, which is its Annual Result, we have ... EBITDA = 40.5. The number you posted was its EBIT. I see your "Return on Capital" is Net Inc./(S.E. + LTD). That would give = (22.859/149.440)x100 = 15.3%. My own preference is Pretax Inc./Cap. Employed. That would give = (35.383/178.053)x100 = 19.9%. If you read Message #475 below you’ll see why I prefer a Pretax Return on Capital Employed, rather than ROE, and other ratios that use Net Income as their numerator. I see GRC’s Annual Turnover was 305.6. That would give an EBITDA Margin of = (40.5/305.6)x100 = 13.3% which, IMO, is good. So if we look at several of GRC’s important Fundamentals, we see a rising Annual T/O, a good Margin, a good Return on C.E., a rising Net Income and EPS, and no debt, which means no debt expense on its Income Statement reducing its profit. This tells me that its business is, currently, in good order. If we look at GRC’s chart, we see that its price was about $26 when its Annual Result was published. At that stage its P/E would have been 26/1.37 = 19, which was not high if we look back at its P/E history. Since then its price, not surprisingly, has risen by about 32% to $35. But one may want to be slightly cautious "going forward", because if we look at the year-on-year percentage increase over the last 5 years in its T/O, we see that it went from 4% to 13.6% to 17.25% to its latest figure of 12.8%. So there has been a relative slow down in that annual percentage increase. The same can be said for its year-on-year percentage increase of its EPS. In the last 4 years that went from 16.1% to 75.4% to its latest figure of 20.2%. So despite its constant Common Shares Outstanding of 16.7 mil., the relative annual percentage increase in its EPS has recently fallen.