1. Determine free cashflow from current contracts. This exercise ignores the capex spent for new contracts. Otherwise you have negative FCF.
2. Determine ROIC, which is the return VOC is getting from the growth capex spent. Last I did this, we have a figure in the high twenties based on EBITDA/cashflow calcs.
Put the two together, compare market cap and do reverse DCF to gauge implied growth rates. Current cap implies FCF growth (pre growth capex) of just over 5% per annum for 10 years, and 10x terminal, using 10% discount rate per annum. I suggest this is a very low hurdle.
Just a very rough back of envelope. Would be interested in input from others.
VOC Price at posting:
$6.15 Sentiment: Hold Disclosure: Held
