Hi Krusty. It is a valid question. How I see it, if it stays at the historic 22-23x, then it should work out long term very well and I will likely remain invested LT at
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<p>Hi Krusty. It is a valid question. How I see it, if it stays at the historic 22-23x, then it should work out long term very well and I will likely remain invested LT at those levels. The company returns everything back to shareholders so buybacks from this modest valuation levels should do the trick. If it trades at 27x 2024 earnings, I would probably sell for a 55% gain in 2 years. So 2 scenarios that should both work fine.</p>
<p>As to why I think this business can trade at 27x normalized earnings, it is based on the quality and durability of the US arch franchise. 3.7% fcf yield for a predictable stream that might grow 6% medium term is not unreasonable (especially once the environment normalizes). The business is arguably significantly better than pre-Valspar given how it came out stronger after this consolidation. Finally, the market might have underpriced the quality of this SHW in the past and results so far proof this.</p>
<p>You points are valid and have been part of some internal battleS in my head jeje.</p>
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