Just been doing a bit of doodling with some figures.... tell me what you think.
One visible part of Clarksons business is the shipping rates index. I have made a big assumption that the various elements of the business are all influenced equally by the amount of demand for ships. (ie Dry Bulk, Tankers, Sale and Purchase, Futures Broking etc.)
The various index are all at or near year highs, but I have used only the Bulk Dry index.
During the first six months Clarkson made 20p EPS and the index was, on average, around 40% of the current level. For the second half the average of the index was about 67% of its current level. Therefore second half EPS equals
67% / 40% times 20p = 33.5p
That is 53.5p for the year and if the Index averages around the current level for the whole of next year then 100p EPS is very possible. I therefore feel that a reasonable 12 month target price would be £8.00 so I’ve just topped up with another 2K at 478p
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