Hi @will1231 - You said:

Just a thought about the valuation of Humm,

They have First half Cash Earnings per Share (“EPS”) of 11.0c ,

So that is 0.22 cents per share for FY25,

They also have about $113.6 million in unrestricted cash which is $0.2309 per share,

And the current share price is $ 0.53,

So $0.53 - $0.2309 = $0.30 rounded,

And $0.30/$0.22CPS = 1.36,

So the current PE of Humm is 1.36,

Sounds like it is a good buy at the moment,

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So, a couple of problems with that, firstly, their first half cash earnings per share (EPS) was 5.5 cps, not 11cps, as shown in their announcement:

Their stautory NPAT was $27.3m, and they have 491,760,853 shares on issue (see here), so that's 5.55 cents/share.

I have highlighted above with the two orange arrows where they claim to have cash EPS of 11 cps, but with a reference to footnote #2 which states: Cash EPS is calculated as ANNUALISED Cash profit (after tax) as percentage of weighted average total number of shares on issue for the period.

So they have sneakily doubled their H1 cash EPS of 5.5 cps to give you an annualised cash EPS of 11 cps. So if you double that again to get 22 cps that would be for two years, not one, and that is assuming they can maintain or exceed their H1 cash EPS of 5.5 cps every 6 months over the next two years.

Secondly, you have mentioned their $113.6 million in unrestricted cash which is $0.2309 per share and have deducted this from their share price to arrive at a very low PE ratio. That's not how PE ratios work. While HUM have $113.6m in cash (which works out to $0.231 on a per share basis based on 491,760,853 shares on issue) they also had $4.718 billion in short-term debt as of December 31, 2024 and total current liabilities (including short-term debt, provisions, and other current liabilities) of $4.835 billion. Their Assets Under Management (AUM) increased to $5.3 billion as of 31 December 2024.

The point is that their unrestricted cash isn't surplus cash that they are going to return to shareholders, it is used within their business as working capital and to pay bills including to service and try to reduce their debt, so it can't be backed out of their market cap to make them look less expensive.

The reasons why HUM's share price has dropped from over $3/share to 53 cents/share over the past 10 years is because of their declining earnings and declining ROE:

They also have had negative cashflow and a lot of debt for a microcap company with a market capitalisation of just $256 million.

Source: Commsec.

There's very little to like about this company, hence why there's very little demand to buy their shares.

The ASX has HUM's PE listed as 7.31, which would be cheap if they were a decent company with metrics heading in the right direction, such as low debt, growing profitability, cash-flow positive, well positioned within their industry with tailwinds rather than headwinds, high ROE, and good management with an excellent track record of executing superbly on their plans and providing great shareholder returns (TSRs), but, unfortunately, none of those things appear to be the case, so on that basis, I wouldn't go near them myself.