Thursday, December 22, 2011

Diary: 6 months ago

Let's see what I wrote in June, and see if it was any good.

SN. - Smith & Nephew - I liked it - high ROE, high growth, good balance sheet, EPS growth of 13% pa over a decade (!).  Over 6 months, it is down 8.4%, compared to FTSE down 5.4%. Hmm.

Interestingly, I was reading about "Buffett's one dollar premise", which postulates that it was worthwhile a company retaining earnings if for every dollar it retained, it made one dollar in market value.

To see if this happened ....
SN.'s market cap is £5232m, or a share price of 592p, up 46.5% over the decade. That's an increase of 188p in the share price. Over the last 10 years, adjusted EPS totalled 269.91p, and divvies totalled 64.44p, so the totalled retained earnings was 205.47p. So, disappointing. BUT, to be fair, a decade ago the company was trading on a PER of 29.4, whereas it's currently trading on a PER of 12.6.  So it kinda gets there. You just have to not buy stuff on a PER of 29.

I also said I liked DNO - Domino Printing Sciences, trading at a PER of 18. Well, a PER of 18 is going to turn out bad. Over the last 6 months, the share price is down 23.0%. It's now trading on a PER of 13.4. Eat your heart out, Warren Buffett. But probably not.

Out of similar curiousity, I did the one dollar premise. Over the decade,it's up 297.3%. Crunching through the maths, at a current share price of 507.5p, that's a gain of 380p. Total adjusted earnings is 221p, and divvies is 99p, or a retained amount of 122p. So we have a winner.

Finally, I reported what I considered the laziest spammer ever:
From: Mrs helen cole
Subject: I am sick
I am sick.please contact my lawyer E-Mail (
 As far as I know, she's still the laziest spammer in existence. How's the spamming coming along, I wonder.

Still to come: a "what I learnt this year review". Stay tuned.

1 comment:

Monevator said...

I wouldn't write off SN just yet. I think it'll come back with the US consumer, and it's very well-placed for all kinds of favourable outcomes (not least a takeover).