Pinned straw:
Does anyone have a view on why Smart Parking shares are down 42% in 3 months following a stunning results announcement? They are now sitting close to a 12 month low.
Based on consensus (2 analysts) the business is trading on 25 times FY26 NPAT and 17 times FY27 NPAT. Using McNiven’s formula I get a valuation of 97cps on a required 11% annual return. This is a lower return than I generally use. However, given earnings are likely to grow at over 30%, FY27 ROE is likely to be 24%, with no debt and $25 million in cash, the risk/reward for Smart Parking at 83 cps seems very attractive to me. Am I missing something…is there an increased risk of regulatory changes perhaps??
Disc held IRL (0.4%)
Good points @TacconG @raymon68 @Dangles! Yes I think SPZ was quite expensive at its peak and the reason for a decent part of the share price decline (PE compression if you must). However, it’s worth considering how valid it is to use any valuation formula that actually includes the share price as part of the formula! A PE valuation (P/E x E) assumes the business metrics essentially remain the same as you project earnings forward. This rarely happens. A business generally improves or declines over time, sometimes slowly without the market noticing (like boiling a frog). So PE valuation can be a good guide from year to year but it’s dangerous to rely on it without monitoring the trends in margins and ROE. Dominos is a good example of this. Investors continued using historical PE valuations for a business where the metrics have been in decline for 8 years.
Coming back to SPZ, yes it was overvalued in my opinion, but I believe the business metrics are improving, or are they? My projection of FY27 ROE at 25% might be a tad over optimistic perhaps?
I guess we will find out soon enough when the FY2026 results are released.
@GazD I ran an XmR Chart on daily volumes at 3-SD level.Upper Control Limit (UCL) showing in Green. 99.7% should be within limit. (Anyone interested in the method, here's a link: XmR Charts)
Today's volumes just hit the UCL, being the 3rd day in recent weeks. This implies there is high confidence of an assignable cause to the departure from "normal" volumes. Perhaps a large investor/fund is accumlating and willing to do so at prices up to the current TP consensus, which is $0.725?
Interestingly, after the buying price spikes, the next day volumes are back to normal with profit-takers having an outsized negative impact on bringing the SP back to its previous level. (See below)
So overall, it looks like there is more demand for $SPZ than supply, with at these levels more investors looking to enter or accumulate that those looking to lighten or exit.
I've never done this analysis on stocks before (it is a standard tool in managing business operations) - but your question got me curious, so I thought I'd have a go.
It doesn't have any practical implications for me. I agree with analysts that around $0.70 to $0.75 $SPZ is fairly valued, the uncertainty is still wide, and so I wouldn't contemplate selling anywhere below $1.00 and, for now, my position size is about right (3.5%).
