Discl: Held IRL 2.43%

One of the points raised on Share Buy Backs on the Stocktake podcast flagged by @UncleWally is that a share buy back is a “good one” if the shares are undervalued. 

Knocked up a quick valuation for NAN to test that thought. Have taken a more conservative approach than what Chat is saying are analyst consensus. Have essentially used growth rates which are a notch lower than the suggestions ie Chats Base Case = my Growth case, Chats Pessimistic Case = my Base Case, which makes my Pessimistic Case that much more conservative.

With these more conservative parameters, the NAN price appears to be “in the zone” based on the price movements in the last 2 or so months. 

INPUTS

EPS Growth from Chat

• Nanosonics’ EPS jumped from approx A$0.043 to A$0.068 in one year (~59%) per one source.
• Analyst consensus: about ~19.6% p.a. EPS growth over next few years.
• Half-year result: revenue +18% in H1 FY25, with capital sales +11% and consumables/service +20% on year-ago.
• P/E / valuation context
• Current trailing P/E ~ ≈ 63–70×.
• Industry benchmark for “Medical Devices / Instruments & Supplies” globally around ~30×.
• Some commentary (Simply Wall St) suggests a “fair” P/E for NAN might be ~36× compared to current ~66×

So the company is growing rapidly (though from a low base) and the market is paying a high multiple relative to peers and industry average.