Down 10% today, page-3

I cannot find any reason why the big fall but I guess it could be traders getting out after Chuck Hagel ( US defense secretary) was sacked. The Pentagon was expected last week to announced the outcome of the Small Service Combatant (SSC) review and that outcome was confidently expected to be 20 modified Littoral Combat Ships. This would probably have given Austal work until the end of the next decade. Now the results of the review may not be announced until there is a new Defence Secretary - early next year.

I remain happy with Austal because;

1. Very probable the SSC will be a modified Littoral Combat Ship.
2. The falling $A gives a boost to Austal's earnings
3. Management are confident of more orders from the Middle East within the next several months.
3. Service work on the LCS's and JHSV's is increasing and this will add a substantial recurring high margin income over coming years.
4. My calculations have the e.p.s. higher than that assumed by the market. As far as I can see the consensus earning for 14/15 is about 13.5 c/s but I have it nearer 15c/s.
5. As the profits from Austal get larger and more predicable I expect Austal will be rated with a larger PER than the current 8 or 9 especially as the company has low debt and is soon to recommence paying dividends