3rd stealth increase from TD to a meager $7.50The analyst who perhaps lacks a rigorous understanding of the sector is even weighing in.
Sean thinks a 4.7 multiple is a thing. Hey Sean -- it ain't. Why would you even think that? The global average is 17.4x and forestry is 8.9. Didn't you learn that in CFA school? Why even bother dialing into calls when you just blindly submarine this stock?
Anyway, his text is below. Note he calls it "changing debt reductions". Why would it change?? Could it be what a normal person would call obscene levels of cash earnings? Shucks. I don't know I am just a simple man who makes an easy 30%+ return every year.
Also, Sean from TD's global 6.0x multiple is totally offside.
I didn't read the report but his 4.7x implies earnings in 2018 of about $74M. At a 4.7x less debt that's about $7.50.
Interestingly if he used his modest 6.0x sector multiple his calcuation it would have resulted in about $11.11 per share as a target, which is much more fair and accurate. I argue that CFF should be a premium to the 6.0x average given the better fibre basket and steady annuity earnings from the power facility.
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Justification of Target Price |
| 12-Month Target Price: $7.50 |
| Our 12-month target price of $7.50 is based on a 4.7x EV/EBITDA multiple using our estimate of trend EBITDA. To capture the impact of changing net debt expectations, we adjust our enterprise value calculation with expected free cash flows through the end of 2019. The target multiple compares with an average of 6.0x applied across our coverage universe. |