I was looking at Randon Free Cash Flow, but it's very difficult to analyse it, because RAPT is a growth company. So I did the following:
- I adjusted shareholder's equity since 2005 by inflation (IGPM).
- Then I calculated real growth in shareholder's equity:
That is, in the last 5 years Randon had a real shareholder's equity growth of around 14%. Moreover, it has been paying steady and growing dividends of about 4% of market value.
So I think that total return to shareholder is 18% per year, because net debt since 2005 has not grown and is at the same level of 200 mi.
What you think about?
10 comments:
2012 will be an important year for RAPT, MYPK and SHUL, because the new standard of diesel fuel will start to apply. In 2011 many clients anticipated orders to avoid the price increase that will happen when the trucks start being built to comply the new rule. I think FRAS is more stable, being half like a razorblade factory and half like a truck factory. Geração Futuro's Seleção FIA has a good share of FRAS4.
But I'm talking about a larger period: 5 years. And Randon has been growing steadily since then.
It's difficult to access intrinsic value when you must stipulate a high growth rate. Otherwise, if I don't use a high growth rate the payout can be larger. I think the best way is to subtract from the CFO the minimum reposition/maintenance CAPEX, whatever it is.
I know Warren Buffett uses the Equity growth as a measure for it's perfomance. I think that for growth companies that analysis you did may be the best to way to access value. After, of course, analysing the quality of the business itself.
That's the point: if company stops to grow then that real shareholder's equity growth of 14% could be converted (in some degree) into dividends.
If I calculate FCF from 2008 to 2011 without investments in work capital and consider just half of investments made(for maintenance) the average FCF would be 10% of current market value.
What's the average FCF for the last few years, considering the full CAPEX?
Not so high. Another way you can look at RAPT is by historical ROE. It has been almost all the time above 20%. If we apply 20% at current shareholder's equity, P/E < 8.0
Geração Futuro: "Detêm participações relevantes (acima de 5% da classe de ações) no(s)
seguintes emissor(es): BicBanco, Bradespar, Celesc, Eternit, Eletropaulo, Forjas
Taurus, Randon, Tecnisa."
Randon 2012 guidance says that revenue will be about 4.2 billions, slightly above 2011.
So maybe the company will not be so affected by the anticipated orders.
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