EBO-Ebos

[lorraina]

Quality company yes,but value I very much doubt.
PE of 22.493 for 5.2% eps growth?
P/E
22.493
EPS
$1.185
NTA
-$4.501
Gross Div Yield
4.835%
Securities Issued
205,031,863

[winner (n)]

Quality company yes,but value I very much doubt.
PE of 22.493 for 5.2% eps growth?
P/E
22.493
EPS
$1.185
NTA
-$4.501
Gross Div Yield
4.835%
Securities Issued
205,031,863

That's the past lorrianna .... need to think about the future prospects

[Basil]

The P/E ratio has a compound annual growth rate of +8.2% p.a. for the past 10 years; so whilst earnings have grown at +5.2% p.a., investor confidence has grown by +8.2% p.a.

Thanks for your excellent analysis Ferg.
I concur with your EPS 10 year growth rate, I actually got 5.1% CAGR for 10 years, (and Winner, please note that's looking out 3 years into the future and assuming they meet forecast consensus growth for the next 3 years).  I am sure we all agree that this is a very modest growth rate.  Its alarming that even after a quite significant share price correction the PE ratio has grown at an 8.2% CAGR for the last 10 years.  The mind boggles as to what the PE expansion CAGR looked like when the shares were $40+ !

The way I see it, the company reached "market darling" status in the middle of 2025, possibly because its in the "in vogue" healthcare sector but the EPS CAGR rate is simply not supportive of the current price, let alone explain why any brokerage was tipping this as their #1 stock when it was $40+.  To me, this is a great example of the serious risks of blindly following analysts recommendations without doing the number crunching yourself.  I'll stick with my well proven methodology of putting 80-90% stock on what a company has done in the past and only 10-20% stock on what management tell you they're going to do in the future.    In this case I've given management beyond the maximum possible benefit of the doubt putting a massive 30% weight on future prospects, and assumed they will meet the next 3 years consensus growth expectations and I still only get a 10 year (combined historical 7 year + forward 3 year) EPS CAGR of 5.1% which is why I am so underwhelmed.

[winner (n)]

I'll put up my EBO chart again ...the one showing EPS and shareprice for most of this century

I say thst over the duration of the chart the average PE has been 19. The current PE based on F26 forecast EPS $1.47 (Marketscreener has A$1.294) is 18....below long term average.  PS at xrate .86 PE is about 17.

Ferg has his methodology and it's pretty robust but I prefer my way and a picture tells a good story

Yes Basil the share price over $45 a while ago was wgphen the market went silly and most stocks got big rises which turned out to unwarranted.


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[winner (n)]

The Marketscreener forecast EPSs in A$ are -

F25. 1.216. 
F26  1.294    +6.5%
F27.  1.439. +11.5%
F28. 1.612.  +12.1%

1.294 is NZ$1.50 so EBO has a forward PE of 17.7 at $26.60 ....with double digit growth forecast for the following 2 years

[Ferg]

Those are bullish forecasts winner....well above historical.  Although I use warts and all NPAT, whereas is that underlying profit per market screener?  I also posted on the other site I don't think they could get NPAT to 3% of sales - I think they will deliver an average of 2% of sales given they are a low margin business.  In the past 15 years their peak NPAT% was 2.3% in 2011.

At $26 I think EBO is fairly priced using my assumptions in a DCF calculator....it should give an 8% yield if they keep doing what they have been doing.  I'm assuming annual sales growth of 8%, share count increase of 3% p.a., dividends at 80% of EPS and a P/E ratio of 20....so that $26 price for an 8% yield means they can't have any earnings misses in the next 5 years.....it can be done but it's a tall order.

[Basil]

I say thst over the duration of the chart the average PE has been 19. The current PE based on F26 forecast EPS $1.47 (Marketscreener has A$1.294) is 18....below long term average.  PS at xrate .86 PE is about 17

The approach you've taken is in my opinion commonly used by analysts and I think many use historical average metrics as a yardstick for what's fair and reasonable in the future regardless of whether the metrics based on the average growth rate are quantitatively reasonable or not.  I would call this "sector bias" if there is such a thing.  FPH another good example, from the healthcare sector where its very hard to justify the forward metrics based on the historical growth rate but because these companies are in the "darling" healthcare sector with an unlimited runway for future growth with an aging population, all sorts of quantitative rationale is disregarded, favored sector bias is applied and perhaps, very brave future growth assumptions go into their DCF models.

Objectively If I stop making excuses for the company around the loss of the CW contract and I stick with my standard 5 year analysis timeframe the EPS CAGR is only 3.3%.  Just as well you can be absolutely certain growth will be far better going forward eh    Good luck mate.

[winner (n)]

Hey Basil, one of your favourite sayings is 'share price follows eps'

My chart (and Fergs) show EBO is a great example of how true that is ...over a very long period. No reason why it won't be in the future.

The forecast eps quoted are from Marketscreener. For what it's worth my forecasts are slightly higher. Mainly based on that the newish growing businesses seem to have higher margins than older ones - the 'hidden gems' some brokers call them.

Interesting to see how all this turns out but main issue at the moment is the lack of clarity from management which seems to have pissed off some big holders who want out. Once they get their credibility back all good I reckon.

[winner (n)]

I was rather intrigued with this what Ferg came up and what Basil latched on to -  PE ratio has grown at an 8.2% CAGR for the last 10 years.

Suppose maths is maths etc etc.butin the context of today what does it really mean

I don't know but for interest sakes here how I see EBO PE over the years

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[Ferg]

I was rather intrigued with this what Ferg came up and what Basil latched on to -  PE ratio has grown at an 8.2% CAGR for the last 10 years.

Suppose maths is maths etc etc.butin the context of today what does it really mean

From a maths perspective, what it means is you can track the 4 drivers of share price movement over long periods of time.  It breaks down to Change in SP today vs time zero.  A SP is expressed as EPS x P/E ratio.  EPS is further broken down to Sales x NPAT% / shares.  Putting all this together, we can determine what has driven a change in share price:

 1) Sales is driven by consumers
 2) Share count is driven by directors (what I call 'acquired' sales) - hence the reason I look at Sales/Share
 3) NPAT% is driven by management
 4) P/E ratio (or sentiment) is driven by investors.

All of these get expressed as a CAGR.

For example: 10 years ago EBO share price at June 2015 was $10.90, SP at June 2025 was $39.82.  What drove this SP increase?
 1) Sales went from $6.07b to $13.4b - a CAGR of 8.288%
 2) Share count went from 50.8m to 150.7m - a CAGR of 3.037%
 3) NPAT % went from 1.746% to 1.759% - a CAGR of 0.074%
 4) P/E ratio went from 12.1 to 34.2 - a CAGR of 8.232%

Combining 1, 2 & 3 gives EPS CAGR of [ ((1.0829 x 1.00074 / 1.03037)-1 = ] 5.175% (beware of rounding errors)

Starting SP of $10.90 x ((1.05175 x 1.08232)^10) = $10.90 x 3.653 (beware of roundings) = ending SP of $39.82

So the SP has increased 3.6 times over the past 10 years where growth in investor sentiment has outpaced EPS growth.

[Basil]

For what its worth Winner, Tony seems to like their Blackhawk dog food. He's lying on my bed in the sun looking very contented after his breakfast. Maybe that's a good sign

[Ferg]

Further to my post, here are the words expressed in graphical form.  This shows EBO vs FPH:

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I should probably normalise these graphs to 10 years....they currently use all available data that I have.

[winner (n)]

Interesting way of looking at how share price has evolved ....especially breaking it down into consumers etc.

I've often done similar sort of exercise but used $'s instead of CAGR

Like in simple terms share price in your example has gone up $28.92 of which $3.13 came from increased EPS and $25.79 from change in market sentiment or PE expansion.

Must say your starting point is a low and end point is near a high so some would say could be a bit misleading.

Bit different six months on eh with a much lower PE and all those new shares not really adding any value so far

[winner (n)]

Craigs sent me some insights this morning and reminded us why they like EBO

EBOS Group

EBOS Group is an outstanding business which has fallen out of favour since the company provided disappointing FY26 guidance in August, as the company's costs were higher than expected. We think these issues are largely one-off, and FY27 will see EBOS Group return to more typical growth rates. With EBOS Group shares trading at just 18x forward PE (which is a discount to its long-term average), we see potential for the shares to perform well over 2026 ahead as investor visibility of a pick-up in growth improves.

[Crackity]

Craigs sent me some insights this morning and reminded us why they like EBO

EBOS Group

EBOS Group is an outstanding business which has fallen out of favour since the company provided disappointing FY26 guidance in August, as the company's costs were higher than expected. We think these issues are largely one-off, and FY27 will see EBOS Group return to more typical growth rates. With EBOS Group shares trading at just 18x forward PE (which is a discount to its long-term average), we see potential for the shares to perform well over 2026 ahead as investor visibility of a pick-up in growth improves.

I bought some today

Probably gonna regret it.

Craig's research almost as fraught as the Dunedin crowd