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Re: Buybacks aren't the best way to enrich shareholders - THAT DEPENDS!!To ball park the current situation, if the price were to remain stable, if CTL used $1.2 bill of FCF each year to buy back shares, you would buy back 10% of the outstanding shares each year. Your value would increase by over 10% per year by decreasing outstanding shares. With 8% divie, you would get 18% increase in value each year. If this went on for 5 years, you would have 50% shares less, so your value would DOUBLE …. just with outstanding shares decrease. There is a reason that typical PE range between 10-20. Our PE isn 't representative of earnings. FCF is a better measure. Our current price/FCF ratio is FOUR!! Meaning, if you used ALL of the FCF to buyback shares, we could repurchase ALL outstanding shares in 4 years. Or 50% of shares in 2 years! Does our valuation make sense?? ONLY if you think this company is DYING. For me, that is certainly NOT!! I do think reducing debt is best done first, BUT after we get below 3 on debt ratio, we will HAVE to do buybacks if the share price is ANYWHERE near 12 …. but I don't think the price will be anywhere near that level at that time. This is a long-term investment for me. Patience will make us (longs) a LOT of money. JMHO. later, leroyt |
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Msg # | Subject | Author | Recs | Date Posted |
162933 | Re: Buybacks aren't the best way to enrich shareholders - THAT DEPENDS!! | rookie13 | 0 | 10/23/2019 10:09:57 AM |