Clarke Inc T.CKI

RE:Price to book

[Torontojay]

Torontojay wrote:

Historically Clarke has always traded at around a price to book ratio of 0.85. Today, you can purchase shares at about 0.66 times book value. If it gets back to its historical average we should be at $ 11.46. 

Since 2002, the company has increased its book value per share + cumulative dividend growth of 12.3% per year. Book value per share has increased by 9.3% per year. If the company can continue to grow its book value per share at 9.3% for the next 5 years then I can conclude the following; 

1) I may earn 9.3% on my money excluding dividends and about 12.3% on my money including dividends if the company maintains a price to book value of 0.66. 

2) I will double my money excluding any future dividends if the company can continue to grow its book value by 9.3% per year and trade at a price to book value of 0.85. 

Not a bad deal. In a worse case scenario I will likely earn double digits on my investment. In a best case scenario I should at least double my money in 5 years excluding any future dividends. 

It looks like we are right around its historical price to book ratio.