I like using growth rate and gross profit to sales multiples to compare these fast growth high margin businesses* but at the same time it’s crucial to convert that back to a value. Ie what is the most likely cash distributions owners of skf are going to get in the future?
*while also considering further dilution due to cash burn, market size, incentive/ownership structures as well.
I agree that skf isn’t bargain basement value at the moment, and hasn’t ever been for that matter, but for a company growing consistently with quality customers, good alignment, massive market opportunity etc, it certainly isn’t expensive relative to peers and the above analysis does give us some indication of the cash the company ‘could’ pay shareholders.
SKF Price at posting:
17.0¢ Sentiment: Buy Disclosure: Held
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