Brink's Home Security Spinoff: Too Far, Too Fast [View article]
Its not 4x recurring cash flow. Are you looking at cash flow from existing subs? That's not the same as recurring cash flow. That wouldn't factor in the 7% churn every year.
There are several things wrong with your so called true p/e: 1. you are taking out the cash from the 'p' but you're not striping out the benefit of interest income from the 'e' 2. you don't take into account their low tax rate which is not sustainable over a long period of time 3. when comparing it with an S&P multiple, you don't give its ratio the benefit of the cash those companies will generate, not do you strip out the impact of cash.
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What about growing revenue? You working capital line items tend to grow with revenue?
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