Tuesday, March 5, 2013

SEB Quarterly Update

Seaboard (SEB) report year-end earnings last week. They earned $234 per share for the year. I liked their recent consistent quarterly performance. To me, SEB is in a very cyclical and low margin business. But for the last three years the company consistently earned more than $230. This gives SEB a PE of 12. I like companies with PEs around 10 that are consistent and boring. SEB fits the bill. The following chart shows the company's balance sheet and earnings. I have multiplied the PE by my ideal ratio 10.

The chart shows the market cap starting to get high relative to earnings and net-net — I define net-net as total current assets minus total liabilities. I feel if it enters $3000 per share from $2800 today, my SEB story would have played out and I would liquidate as much as taxes would allow. In fact, I am selling a bit here and there as I find better investments.

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