IOOF ifl strategic entry point, page-2

Cash Flow per share has been consistently higher than EPS (coupled with relatively low capEX) which explains how IFL manages to pay out so much of its earnings in dividends and yet its not financed through debt.

(This is good)

Market Forward earnings are based on cost saving synergies from the acquisition of ANZ wealth. This remains an execution risk, however apparently the IFL team have a good track record of achieving this.

Commsec gives 2020 EPS forecasts of 69c and DPS of 61c

At a share price of $7.70 this is a forward PE of 11 and yld of 8% assuming the forecasts are right.

However as stated two major risks:
a) cost synergy risk
b) Equity markets risk (10yr bull market).

On a traditional ROE model, an investment case only stacks up below $7.2 based on 2020 EPS and current june 2018 book value of $5.15 (with RRR 10%).

Watching IFL, but at the moment still on the sidelines. Not ready to strike yet.