Mkonomtupu, Ksh26 for HFCK? On what basis?
That would give it a P/E of 26!

again with the P/E ratio!!!! peeps really need to stop using this method to value counters as something major especially with growth stocks....

i wish some wazurians knew that on some markets like hang seng in china more than 50 stocks are trading with a P/E of more than 80 and yet they continue going up and up....

@wa_ithaka i was simply giving china as an example....
but to cut a long story short. Investors know that HFCK has major potential and can raise their profits way over 1billion easily with equity's help and it is for this very reason equity will be willing to pay 26 and even more than that to get hold of this cash cow....

I've been away from the kenyan market and thus, Its been a while since i logged in or even in actively following the kenyan stock market.
However, after reading a few posts, i couldn't help but offer my two-cents.

One, there is no one perfect ratio to use to determine the viability of an investment. Rather, its a process, series of analysis actions that make a conclusive decision. Each of the ratios stated earlier are good and useful to analyse a particular aspect of the firm's business, not on the entire business.
Two, i use the firm's financials and analyse the quality and utilisation of the firm's assets, liabilities, and equity using the various ratios stated before.
After analysing all this, the key thing i use to analyse any investment or in this case, stock, is sustainable competitive advantage. Basically, how competitive the company is and the likelihood that its going to keep that competitiveness in the near future due to no. of competitors, ease of entry into market, its margins, type of business & its effect on cashflows, target market etc. All this is tempered with economic and consumer trends.
From there, i can determine if its worthwhile to purchase the stock at the prevailing market prices or not.

On the topic at hand, Bank's generally have a low ROA but a relatively high ROE (15-30 range). In my opinion, Housing finance does not have very solid financials. Actually, they are weak. Also, the margins, the capital challenges, the maturity gap challenges are key issues that need to be addressed before Housing Finance performance significantly picks up.

HFCK was busy exploiting our parents with unreasonable, unrealistic, inconsistent mortgages. Ask anyone who took a HFCK mortgage in the 80s and 90s and he'll tell you of the horrors they went through. HFCK was horror on earth.