buying RFG at $4.35, page-35

I have only just noticed all the great comments on this thread over the last month or so, and would like to add to the discussion:

1. Total shareholder return since listing of 30.3% pa; 32.9% pa over last 3 years. Market cap increased from $61M to current $730M in less than 10 years.
2. Cash flow / share has varied from 80% to 110% of EPS over 9 years until last year when it was only 65%. I consider this to be a temporary blip due to one-offs including considerable reinvestment in restructuring, takeover activity, rapid growth and much higher tax compared with the prior year.
3. Many new businesses will start to generate earnings: Professional Caffitaly system, new coffee roasting plants, Powders, GJ drive through, financing and leasing to franchisees.
4. Payback to come from $16.3M investment made into restructuring (mostly expensed in FY15), and project EVO (long way to go on this one).
5. Debt gearing is not excessive, being comparable to historical levels which delivered great outcomes and TSR throughout the GFC, but at lower interest rates now and locked in until 2020. Better to use debt at low interest than issue new shares for growth.
6. EBITDA / outlet increased by 13.6% (traditional average), -2% for QSR, 41.3% for coffee retail, 6.6% for coffee mobile (overall a great result for RFG). Growth from higher average EBITDA / outlet and the high rate of outlet openings will be substantial.
7. RFG has given guidance using the words "Enthusiastic" and "Buoyant". Guidance for 1h16 increased to +35% on the most meaningful "like-for-like" measure which adjusts for one-offs. Not bad for a stock on a forward P/E of around 11, with a growth history and outlook like RFG. Sure, they had a few low growth years up to FY14, but the longer-term averages speak for themselves.
8. My estimate of ROE for FY16 is around 17% (not 20% as some have claimed). However, this is increasing back to the more normal 20% or so over the next few years in my opinion.
9. The dividend payout ratio (not the actual dividend) was reduced at the last payment, due to the greater scope for reinvesting profits for higher returns.

RFG is my third highest weighting in my super fund, and I remain confident in its outlook. All the above is my opinion only and should be checked and researched before taking any trading action.