ValuationLast Friday COH traded between $50.00 and $52.30
Using an adjusted average Price/Earnings (PE) ratio of 23, and forecast NROE of approx. 48-55% (declining as equity per share increases) Empire values COH at $83 per share until the next earnings report (scheduled for early August). COH has a history of being “bid-up” by the market, with price/value convergences rare.
At a standard 10% discount for “Wonderful” companies, our maximum buy price would be $76 (i.e we would accumulate at any price below this level).
However, the foreign exchange risk implies purchasing COH shares at a slightly higher margin of safety, so we believe COH is excellent value at any price below $73. Cochlear recently closed below this level, and is currently trading at $72.12
Who exactly is the author of this Wonder?
Chris Becker writes as The Prince. He is a full time equities trader as well as a partner in Empire Investing, a private value investing company. Chris is a former financial advisor and portfolio manager for a boutique financial services company with extensive experience in equities and derivatives trading.
