A 70-Year-Old US Business for 0.6x TBV
Also trading at 5.8x FCF with an activist friendly ownership structure.
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Today’s business was founded in 1956 and has operated successfully ever since.
It sells branded products that you’ve almost certainly purchased, let alone heard of.
The market is currently pricing it as a melting ice cube that is already dead.
We can purchase the tangible assets for almost half price and get the operating business for nothing.
Here are the valuation ratios:
NCAV = 2.2
TBV = 0.6
EV/FCF = 5.8
P/FCF =6.2
If this was offered to me in the real world, and I could buy it with a fraction of my capital base, I believe it would be a very low risk deal.
The balance sheet is a fortress of net-cash, gross margins are actually improving, and the assets are worth considerably more than the stated book value.
Let’s take a look…