THAT Econet's share is undervalued is not subject to debate. At the current price of 370 cents, Econet is a bargain.
With the current reported earnings per share of 66 US cents and a price earnings multiple of 4, Econet's share should be selling for about US$4,60, given that Econet's share traded at an earnings multiple of 7 for a long time. If Econet's share once sold at 7 times its earnings capacity, it simply means that the market has since lost confidence in Econet's capacity to generate future earnings. That sounds very strange considering the high profit margin potential of its newly lauched EcoCash money transfer system. Are perceived corporate governance practices stronger than the undisputed track record of a profitable pipeline of innovative products?
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