Know Your Stocks - How Expensive is SM Investment Corp. (SM) fundamentally based from their Dec 2016 Annual Report?

SM Investments Corporation (SM) was incorporated on January 15, 1960 to serve as the holding company of the SM Group of Companies. For management purposes, SM is organized into business units based on products and services. As a result of the property group corporate restructuring in 2013, SM changed the presentation of its segment information and has identified three reportable operating segments as follows: property, retail, and financial services and others.

The property segment is involved in mall, residential and commercial development and hotels and convention centers operations. The retail segment is engaged in the retail/wholesale trading of merchandise such as dry goods, wearing apparels, food and other merchandise. The financial services and others segment primarily includes the Company which engages in asset management and capital investments, and associates which are involved in financial services.

The Company is engaged in businesses through its subsidiaries, namely: retail ("The SM Store", "SM Supermarkets", "SM Hypermarkets", "SaveMore" and Waltermart Supermarket, Inc.); property (SM Prime Holdings, Inc.); financial services (BDO Unibank, Inc. and The China Banking Corporation); and others (Belle Corporation, Atlas Consolidated Mining & Development Corporation, and The Net Group).

On February 29, 2016, the Board of SM approved the merger of its retail arm, SM Retail Inc., with several related retail companies. The related companies operate local retail chains including "Ace Hardware"; "SM Appliance Center"; "Homeworld"; "Our Home"; "Toy Kingdom"; "Watsons"; "Kultura"; "Baby Company"; "Sports Station"; and several other specialty stores. The combined entity will have 1,927 outlets and 2.4 million square meter of gross floor area

As of May 04, 2017, SM was last traded price at PHP 755.00, a gained of 1.34% from the last traded price. SM is part of PSE index with a percent weight of 10.86% meaning, of all the 30 companies within PSE index, SM effect on PSEi movement is the highest. 

The current market price of this company is 2.19 times higher compared to their recorded book last December 2016, not yet expensive for most value investor since a PBV of more than 3 is considered expensive. In terms of P/E, the company recorded a trailing P/E of 29.15 meaning, for every 1PHP earning last 2016, investors of this company are willing or is paying 29.15Php. With a 29.15 P/E and with growth rate of 7.6% from 2015 to 2016, the company trailing PEG ratio would be 3.83 which means, investors of this company are paying 29.15Php for every 1Php income last 2016 for a 7.6% growth rate only from 2015 to 2016. A fair valued stock usually has PEG ratio of 1 meaning, what you are paying for that earning- the P/E is equivalent to the growth rate- increase in EPS.

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