looks pretty solid, with very good earnings historyhowever, i...

looks pretty solid, with very good earnings history

however, i would not say it is cheap or expensive but fairly price

when it reached $8.64 in June, it was trading on a PE ratio of 16, which was over-valued in today's enviromment & was a sell

we must keep in mind when companies report EPS, they do so on a 'weighted' basis (after new shares have been recently issued) so the 62 cents EPS reported (over 119m shares) was, in reality, only 53 cents (over the 138m actually on issue at 30/6/12)

thus, when looking at the valuation, keep in mind:

1. CDD have made many acquisitions, using cash, debt & shares

2. the earnings from these acquisition seem like they will not be kicking in strongly over this half, which is forecast to earn $38m npat for the half year, similar to the $74m npat fully year profit for last year

3. however, since January 2012, the shares on issue have increased from 113m to 139m and the long term debt nearly doubled over 12 months

4. the FY12 EPS was 'weighted' over 119m shares, despite 138m shares on issue at 30/6/12

5. non-weighted EPS will be 27 cents undiluted for 1/2 year to 31/12/12 or 25 cents fully diluted

6. at $6.20 share price, the PE ratio based on this half's earnings will be 12.4, fully diluted

7. dividend yield will be 7.5% before tax (if 60% of 27 cents EPS is paid out in dividends)

dividend of 7.5% before tax and PE ratio of 12.4 is fair value