How much would you pay for the following stream of cash flows?

There is a company I’m currently evaluating, that is leaving me scratching my head for various reasons. I may post more on it later, but for now I leave you with the following questions: How much would you pay for the business with cash flow characteristics as shown below? How much do you think the market is currently willing to pay for it?

Advertisements

One Response to How much would you pay for the following stream of cash flows?

  1. On pure quantitative terms, there is no way of knowing without knowing the underlying revenues (i.e. its margins) and its balance sheet (i.e. “ROE”, in quotes). (e.g. if the equity of this company is 400,000,000, we are looking at a “growing” company with opCF/equity of <1%. We can forget about it. On the other hand, if equity is 4,000,000, this will be very interesting.) But if I were researching this company, I'd definitely try to understand the competition dynamics in the industry first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: