A World-Famous Brand for 5x FCF
Also includes a 17.8% SH Yield and hidden assets worth today’s market cap alone.
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Today’s business is being priced for significant decline.
In fact, the market is currently implying that the operating business will cease to generate any meaningful FCF beyond the next 5 years.
Here are the valuation ratios:
EV/FCF = 5.3
P/FCF = 5.6
There is no protection in tangible assets, both NCAV and TBV are negative when we strip out all the stuff you couldn’t actually sell in the real world.
However, there is an asset, valued at $0 on the balance sheet that is almost certainly worth the current market cap in its own right.
This gives us the rest of the operating business ($124m FCF per year), and all the other assets for free.
A pretty solid margin of safety, to protect against any liquidation scenario.
On top of this, the total shareholder yield is almost 18%, even after factoring in dilution and SBC activity.
Let’s take a look…