China's economy is growing at around 9% annually, pork consumption is growing as protein becomes more affordable for the growing middle class, HOGS is expanding capacity and will grow revenues and earnings by about 20% next year, and the stock trades at a measely 8x forward EPS.
Is it possible that the overhang from the recent offering is still holding the stock back or is there something else going on here that is preveting HOGS from getting a decent valuation?
Margins are low and expansion costs high for Walmart also but that didn't keep them from taking advantage of opportunities for growth. Incidentally, HOGS profit margin is significantly higher than WMT while the PE is significantly lower.
It's not a criticism (the margins), it's an observation about the business they are in. Keep in mind that revenue and earnings growth are pretty cap ex intensive, so potential dilution is always a concern. That combined with multiples for their peers being rather low means the stock will likely appear under valued.
That said, to reiterate, I think it's worth $20 before 06/10.