This is just a surface-style of analysis. I’m not taking into account any growth prospects. Most likely, the stocks are being sold cheap for valid reasons, other than emotions.
Reminder when picking up fallen angels for a bounce:
A Parallelism between Properties and Stocks
“A cheap property is not always the one with good value,” he says. He says this is the reason a buyer should also take into account quality of the property because one that has good quality also appreciates faster in value over the years.”
A Few Fallen Angels:
Results show that ABS is trading at 11x P/E. Its direct comparable in the Philippines (GMA7) by comparison is trading at 28X P/E. Note that GMA7 has traded at elevated valuations particularly due to the Manny Pangilinan bid on a GMA7-TV5 merger and acquisition.
Re ABS decline – I don’t know why it’s falling. I haven’t been reading much about this company except that I know it recently reported 1H2012 earnings. Earnings were down 8% to Php647 Mil for 1H2012. Other than their planned venture to go into the themepark business, I don’t know why ABS has been tanking. As a media conglomerate, 60% of ABS’ revenues come from advertisements, while the rest come from subscription (Skycable etc.)
ABS PE Band and Relative Valuation
As you can see from the charts below, ABS at 24.45 is trading approximately at 10.88x consensus 2013 p/e. While the company has traded at a historical low of 8X P/E in prior years, perhaps around 18 to 20 levels, some will bottom fish, if not yet now. (Again, do your due diligence and homework. This is just a rough analysis. No recommendations.)
CEB’s PE Band and RV
In CEB’s case- negative headwinds in the earnings come from the 50% drop in earnings from approximately Php6.9 Bil (2010 net income) + to Php3.7 Bil last 2011
CEB is trying to squeeze a margin in a tight industry. Fares are getting cheaper – and even with the increase in volume, expenses (especially jet fuel) isn’t falling, hence margins and net income have been affected. CEB’s strategies such as long haul flights to UAE and other Arab countries where typically OFW workers go to are being planned and will start commercial operations by 2013 to help increase margins.
Another setback for CEB has been the deletion in the MSCI. Are these negative headwinds priced in? Let’s see.
CEB is trading at 9.42x estimated 2013 P/E. 🙂
Read the income statement through this link: http://www.bloomberg.com/quote/CEB:PM/income-statement
Hope the following tables help in making you better informed in your trading decisions,
– Faceless Trader 🙂
The author has clients who may have shares in the aforementioned companies, which may indirectly cause a conflict of interest. Please be guided accordingly.