MENU

Will the SEEK Limited share price keep climbing?

The share price of SEEK Limited (ASX: SEK) finished the day 0.4% higher at $14.41 today, after the leading online employment classifieds operator held its annual general meeting (AGM).

The higher close today takes the gains in Seek’s share price over the past month to around 12%, however, the stock still remains down approximately 16% for calendar year 2015.

At the AGM management reaffirmed guidance which is a key factor in determining the near-term trajectory for the share price.

Here’s what was stated by management:

  • Reaffirmed all guidance statements provided at August 2015 (time of full year results)
  • Reaffirmed reported revenue growth for financial year (FY) 2016 to be in the range of 15% to 18% above FY 2015
  • Reaffirmed earnings before interest, tax, depreciation, amortisation (EBITDA) growth for FY 2016 in the range of 5% to 8% above FY 2015
  • Reaffirmed adjusted guidance for the initial public offering (IPO) of education business IDP and associated interest expense savings that SEEK’s underlying FY 2016 net profit after tax (excluding negative impact of early stage losses) would be approximately $195 million

With the stock commanding a market capitalisation very near $5 billion, the reaffirmed guidance implies that SEEK’s shares are trading on a price-to-earnings (PE) ratio of approximately 25.5 times.

That could be considered a reasonably high multiple and suggest the stock is already priced towards the upper range of what may be considered fair value.

As a cross check, compared against peers such as REA Group Limited (ASX: REA) and Carsales.Com Ltd (ASX:CAR) the PE multiple sits slightly lower than REA’s but above Carsales.Com.

DID YOU KNOW... The Motley Fool's top analysts have just completed a brand-new free report on their top pick for 2015. Be among the first to get the name and code right now. (Hint: It's a sexy ASX tech company!) Simply click here for your FREE copy... BEFORE the investing crowd gets wind of this!

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.