I think you will find the best way to analyse this business is by looking at EBITDA rather than accounting profit.
ie the business effectively outlays X amount of capital at Year0 and then receives cash back at Year1 + year2 + year3 + year4 etc. The best proxy for the cash is effectively EBITDA as depreciation is a non cash charge and will also be used as a tax shield to minimise the company's taxable profit.
I am currently in the middle of trying to determine if the business is worth analysing due to my fear that there is very little pricing power and over the long term that means that its difficult to achieve returns above the cost of capital. Would be great if someone could rebut this point.
Cheers.
NXT Price at posting:
$3.15 Sentiment: None Disclosure: Not Held
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