Neptune Marine Services Initial Analysis
Neptune Marine Services Limited (NMS.AX) are not self funding but are creating value.
Analysis PDF: Initial Analysis and Valuation of Neptune Marine Services Limited (NMS.AX)
While I prefer to invest in companies that are both self funding and creating value from a Hewitt Heiserman’s It’s Earnings That Count perspective, I occasionally forsake my better judgment and dip my toe into unabashed growth stories like Neptune.
I recently bought a small parcel of shares to ensure I could take part in the share purchase plan (SPP) at $0.50 which closes on 17 July. I still have not decided whether to partake in the offer, and won’t until next week when the kids are back at school. I need a large chunk of undisturbed time to wade through their acquisitions and past announcements. However, Neptune has passed my first analysis. There appears to be a better than 3:1 reward/risk profile, they are creating value and there is organic growth on top of their acquisitions. The key metrics look good; EV/EBIT at 5.7, P/S and P/B both under 1 and P/E on consensus earnings of 7.2. Their specific growth story and the larger oil services story are both excellent yarns.
The risk in the acquisition strategy. Studies have shown that around 80% of acquisitions fail to create value.
Analysis PDF: Initial Analysis and Valuation of Neptune Marine Services Limited (NMS.AX)
Initial Post on Neptune Marine Services
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This is not a recommendation and is for entertainment purposes only.
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Hi Dean,
You sure got that stock wrong. I can tell you where you went wrong. Revenue and Profit charts will tell you nothing if you dont consider the cash flows. Cash flows for Neptune Marine were negative for every year it was listed, and it was made worse by the amount the company spent on capex & acquisitions.
EV/EBIT, Price/Sales, PE and Price/Book also tell you nothing about the future prospects of a company or its value. Book value is a useless measure, unless you’ve analysed what makes up those assets.
I’d suggest you read Roger Montgomery’s book Value.Able, from <a href "www.blog.rogermontgomery.com", and have a look ay my blog site. I’ll be writing a post on Neptune later today.
Cheers
Mike
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