CCL valuation looks very interesting here

by Gary Glover

CCL Valuation
Looking at CCL around $9.06-9.16 is quite interesting at the moment.
Using consensus earnings around the 65.25 cents per share gives us a current P/E of 13.8 times.  (earnings has just been adjusted down 15% after recent update)

The last 10 years has seen CCL trade on a high around 22.3 times earnings while the low was 13.9 times earnings in the second half of 2008.  (Deep into the GFC period)
So this stock is trading at the cheapest valuation it has ever traded at in the last 10 years. (even after pricing in a 15% drop in earnings)
The risk here is that the stock is post growth – similar to what happened to Brambles 5-6 years ago when it went from averaging a 19-20 P/E to now averaging a 15-16 P/E.
P/E contraction does happen occasionally so we need to keep that in mind.  Obviously it could get cheaper here but at least you know currently that this is a very cheap price historically.  Dividend yield is likely to be just under 6% fully franked.

We discussed a possible support level at the $10.70 region previously, but the downgrade blew that support level away.  We have watched closely over the past few days to find a safe entry point and feel it might be time to have a serious look as valuation metrics indicate it could be cheap provided no more down grades come in.  


Gary Glover is an Authorised Representative (Rep No. 259215) of Novus Capital Limited ("Novus"). Novus is a holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.

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