For RMS to revert to the average ASX P/E ratio of 15 based on the current valuation of 86.5 cents per share, RMS would need to have earnings per share in the second half of FY2019 of 4.86 cents per share.
With 650,730,834 shares on issue that would mean RMS would need to make a profit in the second half GY 2019 of $31.6 million (to get back to the average P/E ratio of the ASX which is more acceptable for this type of company).
If you look at my previous post of the profits made by RMS since 2015 (below) the most they have ever made since 2015 in a full year is $30.8 million (average full year profit $23 million in this time) so I don't see them making $31.6 million in the second half particulary since the profit in the first half was so small (at $4.8 million) and nothing has really changed other than them no longer having access to higher grade ores at the base of the EM open pit (which is now finished). The only change is the gold price. Maybe the smart analysts think that is going to fix RMS's current problems? Not me. I give them very little chance of reverting to the ASX market PE ratio mean with the current valuation this year, so the only other way to revert to the mean is for the SP to fall. Far more likely IMO, but you guys and gals obviously have your own valid opinions.
One thing you can't do is change the definition of a long established market measure to suit your arguement. A P/E ratio is a P/E ratio. Now when are ASX going to create a ETO put series on RMS for me? Esh
RMS Price at posting:
86.5¢ Sentiment: Sell Disclosure: Not Held
(20min delay)
