Earnings and revenues were both records for any Q1, so that's a good start for the year. Ryan still doesn't seem as confident as Larry did, but may still be doing a good job. Sounds like they getting the chromite under control finally.
Regarding valuation, it looks like revenues willl be up less than 10% on the year and earnings could be up maybe 15% on the year. What kind of multiple to you assign to 15% growth? Currently, using the xnpv calculation with a discount rate of 4%, the market is valuing Amcol assuming a growth rate of 8.6% over the next 20 years. That's conservative, but maybe not unrealistic. If you apply a growth rate of 10% over the next 20 years and a discount rate of 4%, it should be selling for $43.00 per share. That would be PE of about 20, which wouldn't be out of line if they can really grow at 10% for that long. Growth has averaged about 14% over the last 8 years or so. Using that would give a fair value of $80 per share, so clearly most players don't think they can grow at that rate for the next 20 years.
Thanks. That's probably a good indicator as to what kind of growth to expect longer term as the economy improves. I was kind of thinking along those lines today as I listened to the earnings CC for my EMR. I'm not convinced they are going to really grow that fast going forward. So far they haven't done much coming out of the recession. No disasters, but lots of excuses why their master plan isn't doing that well.
On the other side, at least in my case, it's the only really big cap I own, it pays 3% at the current share price, and isn't likely to go out of business. Another consideration for me is that it's probably my only holding that I could sell my entire position at the market and not move the share price. It's nice to have something that's liquid in case of emergencies, so I may just hold it for a while. My cost is about $32 from back in 2009 and who knows, they may get it rolling one of these days.
Amcol's earnings, on the other hand, have recovered pretty well coming out of the recession and we should see a record again this year.