Here is a graph of ARB from around January this year, which we used in various client event slide decks. It makes the point that a) the pandemic was an unusual bump in sales, a pull forward in demand, and not to capitalise it into perpetuity…
…, & b) only by putting the earnings 10 years out on 37x forward could you justify the implied required earnings trajectory, to generate a “market-like” rate of return (here, 7%).
Otherwise, at anything less, ARB were going to need to see earnings growth accelerate in manner unlikely any they’d achieved previously, whilst still cycling the pandemic boost!
Since that was clearly unlikely, it wasn’t one for us. It was closer to $50 at the time, and is now ~$33.
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