Another bumper result from David Teoh and his merry men at TPG.
15% growth in EPS, is smack dead on the sustainable growth ratio (with 37% as the new DPO..it was 26%) and an ROE of 24% (Remember the formula for sustainable growth = (1-DPO)*ROE)
Just goes to show how much of a cash machine this business is. Barely any debt and loads of dosh. And management consistently meet their targets. Who cares if David Teoh controls everything. He is the Rupert Murdoch of Broadband!
After the annual report was published in 2013, I was tempted to buy into this company as it appeared it was heavily undervalued. I actually had a price target of around $9 on it...as it's return on equity was around 24% and it's cost of equity (using CAPM) was only 9%...And this was when it was trading at $4.30!
Price is now at $6 and I think the cost of equity has risen a bit. Still, might still be worth while buying in before the end of the financial year. Still, I could be wrong.
NOTE: Not a recommendation for people to buy/not buy TPG stock. Please see your financial advisor.
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