At the current price of $4, what is the market’s view of Andrew Peller’s future operating performance? To achieve average annual stock market performance of 9.0% over the next 6 years, Andrew Peller shares will need to reach $7. To achieve Upper quartile performance, Andrew Peller’s stock price will need to reach $8 by 2029.
Executive Summary
- Andrew Peller’s important characteristics: instability, very low expected growth, very low profitability, and low financial strength. A big negative influence on Andrew Peller’s valuation is its poor Profitability.
- Very low valuation, below market shareholder returns. Current valuation levels are very low relative to the Andrew Peller Peer Group. Recent market returns have underperformed the Andrew Peller Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, Andrew Peller shares should reach a level of $7 by 2029 — an 15.7% per year total shareholder return. A 2029 stock price of $7 would reflect median performance and a price of $8 would be required to reach upper quartile performance.
- Andrew Peller’s achieved growth is very low. Historical growth has been very low relative to the Andrew Peller Peer Group and forecasted growth is relatively very low. Revenue Growth, EPS Growth, Asset Growth, and Equity Growth have all lagged. These factors have negatively affected market perceptions of Andrew Peller. Andrew Peller’s historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity.
- Profitability has been Andrew Peller’s biggest valuation weakness. Asset Turnover, Pretax ROA, Pretax Margin, and Return on Equity are all group lagging. These factors have negatively affected market perceptions of Andrew Peller. The company has very low cash and will have to work to generate attractive investments and improve valuation.
- Andrew Peller’s risk profile is neutral. Overall variability has been very low with very low revenue variability, above average E.P.S. variability, Financial Strength is very low and earnings’ expectations are below average. The debt/capital ratio has been relatively steady.
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