A Global Market-Leader Priced at 1.5 TTM FCF
It's also a net-net trading at less than half its liquidation value.
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Today’s stock has the following valuation ratios:
NCAV Ratio = 0.6
TBV Ratio = 0.4
EV/5Y FCF Ratio = 2.0
P/5Y FCF Ratio = 3.1
Sometimes, just for fun, I like to compare the 5Y average FCF figures to those of last year and the TTM.
Here they are for this one:
EV/FCF Ratio = 6.5
P/FCF Ratio = 6.9
EV/TTM FCF Ratio = 1.5
P/TTM FCF Ratio = 1.6
In other words, it’s cheap, to a real-world owner, from virtually every angle.
It’s a net-net and trading significantly below the net-value of its tangible assets.
This is probably one of my favourite discoveries over the last year.
It’s dirt-cheap, it’s a US based business that has a global, market-leading brand, and the ownership structure is dominated by institutional investors.
The pricing implies, quite aggressively, that the operating business has no more cash left to give and will probably dry up and wither away very soon.
All we need to do is dig in and figure out if the market is right or it’s just getting a bit carried away with its pessimism.
Let’s take a look…