Apple Trading At 2.56x 2016 Cash Flow [View article]
So pick a discount rate and do the math. If you use a historical 10%, then over five years the difference is 61.05%. Are you telling me that 61% is not material?
Apple Trading At 2.56x 2016 Cash Flow [View article]
Cute story, but $335 billion on the balance sheet in 2016 isn't worth $335 billion today, nor is $60 billion in cash flow to be received at the end of 2016 worth $60 billion today.
Has Paul Krugman Gone Too Far This Time? [View article]
"The 'Bush tax cuts' resulted in dramatically increased Federal tax receipts, eliminating the recession he inherited..."
On an inflation-adjusted basis, it took until 2006 for tax receipts to equal what they were in 2000, and by then the real estate bubble was in full swing anyway.
Restricting it to income taxes, tax receipts have never exceeded those in 2000 on an inflation-adjusted basis.
Treasurys continue to sell off, the yield on the 10-year of 1.78% is the highest since May, and up from 1.39% in 3 weeks. Prices are far from cheap though. A buyer today would lose 6.78% of his/her principal - equal to more than 3 years of coupons - with an increase in yields of just another 50 basis points (h/t tradefast). TLT -5.4% since July 24. [View news story]
Owens-Illinois: A Leading Glass Company At A Very Good Price [View article]
I agree that the debt level is significant but in my view Owens-Illinois can handle it. Setting aside the adequacy of the interest coverage ratio, the long term contracts with inflation adjustments give the company stability of margins. Also, the company's major customers produce consumer staples (soda, beer, wine), and glass bottles have no direct substitutes considering the consumer preference for them.
Chiquita: Valuation And Analysis Series (Part 2) [View article]
As a frustrated long of CQB I may not be in a strong position to argue for the defense of the company, but I don't think the $1.9 billion in purchase commitments for bananas and other produce should necessarily count as part of the enterprise value. What they purchase, they can resell (hopefully) at a profit, unlike the other obligation which are in respect of value already received, and also if they didn't purchase under those obligations they would presumably be buying the same produce on the open market anyway when the times comes.
CSG Systems Underpriced and Attractive [View article]
If I understand your question correctly, you're wondering why I don't subtract long-term debt as well as current liabilities from a company's cash position to arrive at excess cash.
As I see it, on a going concern basis, a company's optimum capital structure will include a certain level of long-term debt, and so it is unnecessary to assume that a company will have to allocate its existing cash towards debt repayments when, as here, the overall debt level is sustainable.
A firm's excess cash, then, is simply cash that is unlikely to be needed by the firm's operations, and is therefore capable of being considered separately, as it were, from the firm's operating assets. I have noticed that the excess cash level, as calculated, does tend to fluctuate significantly among firms on a quarterly basis, and so it would be optimistic to assume that the company could just declare a special dividend of all its excess cash and have no liquidity-related difficulties (although many companies could in fact do so).
But the point of excess cash is that separating it out, and of course separating out the income that it produces, lets us assess the market value of a company's purely operating assets, and also the earnings power that those operating assets are capable of producing. Thus, it allows us to assess what should be the key source of returns for shareholders without having our figures distorted by non-operating income and assets.
Apple Trading At 2.56x 2016 Cash Flow [View article]
Fine, you pick a number for your required return on equity, compound it for five years, and tell me if the result is significant or not. I'm all ears.
Apple Trading At 2.56x 2016 Cash Flow [View article]
Apple Trading At 2.56x 2016 Cash Flow [View article]
Apple Trading At 2.56x 2016 Cash Flow [View article]
Apple Trading At 2.56x 2016 Cash Flow [View article]
I don't know which is worse; not discounting at all or thinking that Apple's cash flows are as good as the United States'.
Maybe I'm getting into Finance 102 territory now.
Apple Trading At 2.56x 2016 Cash Flow [View article]
Discounting to present value is Finance 101.
Has Paul Krugman Gone Too Far This Time? [View article]
On an inflation-adjusted basis, it took until 2006 for tax receipts to equal what they were in 2000, and by then the real estate bubble was in full swing anyway.
Restricting it to income taxes, tax receipts have never exceeded those in 2000 on an inflation-adjusted basis.
Treasurys continue to sell off, the yield on the 10-year of 1.78% is the highest since May, and up from 1.39% in 3 weeks. Prices are far from cheap though. A buyer today would lose 6.78% of his/her principal - equal to more than 3 years of coupons - with an increase in yields of just another 50 basis points (h/t tradefast). TLT -5.4% since July 24. [View news story]
U.K. GDP -0.7% Q/Q in Q2 vs. consensus of -0.2%. (PR) [View news story]
Owens-Illinois: A Leading Glass Company At A Very Good Price [View article]
Chiquita: Valuation And Analysis Series (Part 2) [View article]
A Simple Formula For The Fair Price Of Gold [View article]
Just sayin'.
A Simple Formula For The Fair Price Of Gold [View article]
CSG Systems Underpriced and Attractive [View article]
As I see it, on a going concern basis, a company's optimum capital structure will include a certain level of long-term debt, and so it is unnecessary to assume that a company will have to allocate its existing cash towards debt repayments when, as here, the overall debt level is sustainable.
A firm's excess cash, then, is simply cash that is unlikely to be needed by the firm's operations, and is therefore capable of being considered separately, as it were, from the firm's operating assets. I have noticed that the excess cash level, as calculated, does tend to fluctuate significantly among firms on a quarterly basis, and so it would be optimistic to assume that the company could just declare a special dividend of all its excess cash and have no liquidity-related difficulties (although many companies could in fact do so).
But the point of excess cash is that separating it out, and of course separating out the income that it produces, lets us assess the market value of a company's purely operating assets, and also the earnings power that those operating assets are capable of producing. Thus, it allows us to assess what should be the key source of returns for shareholders without having our figures distorted by non-operating income and assets.
I hope this was helpful to you.
Lesson From Japan: Western Policymakers Must Apply Sustained Fiscal Stimulus [View article]