A Healthy Swiss Cash-Machine for 3x FCF
The 5Y average shareholder yield of 26% illustrates the earnings potential.
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Today’s business is priced as if the operating business is in permanent decline with cash-flows soon withering away to nothing.
As ever, the financial statements tell quite a different story.
Instead of a dying business, we actually have a highly scalable, asset-light operation with zero bank-debt.
They do have lease-obligations but even including these, there is a strong surplus of cash.
In fact, this surplus of net-cash is worth almost 50% of the current market cap.
If you buy it today, you can pick this business up for just 3x FCF.
This is, of course, after adjusting all the figures to represent the cash-flows available to an owner after all real-world cost obligations.
Another interesting insight is that the 5Y shareholder yield is roughly 26%. The yield from last year is 7.26% (at today’s market cap).
This figure has been adjusted to include all forms of dilution and SBC that the business carries out.
The reason I mention this is that it illustrates the possible upside quite well.
One of the core arguments for this idea is that the business is cyclical in nature and sitting right at the trough.
This historical shareholder yield illustrates just how cheap this business is, at today’s price.
Finally, there is little to no risk of an involuntary delisting.
While insiders control roughly 45% of the votes, this is not enough to achieve the two-thirds majority required.
Therefore, we can be relatively safe buying more stock as the price goes lower, and expect to achieve a satisfactory return from any eventual re-rating.
Let’s take a closer look…