A Dominant US Business for 2.5x FCF?
And a case study in how to value quality businesses through an owners lens.
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My goal is to find businesses that I would love to own in the real-world.
Not fancy businesses, or exciting businesses, just the ones that throw off cash consistently every year.
When something looks like it could last forever, I’m even more interested.
When it’s priced cheaply I start buying.
Today’s business is a classic example of the type of business I love to find.
It’s also a great case study in how to figure out the real-world value and whether or not it’s trading at a good price.
If you search for cheap stocks, you’ve probably encountered this business.
The EV/FCF ratio is currently around 2.5x while the P/FCF ratio is roughly 3x.
The balance sheet is also a fortress, with net-cash equivalent to roughly 30% of the market cap, which is currently $3.65b.
When a massive business like this is trading so cheaply, I get interested.
Let’s take a look…