@madamswer I actually noticed a similar trend in a different...

@madamswer

I actually noticed a similar trend in a different metric, namely the stock turnover, which has been steadily going down from high 2's a few years ago to less than 2 now.

As for the average working capital / sales ratio that you mentioned earlier, could you please share with me the exact formula that you used to calculate the ratio? Your figures seem to be different to mine.

@MarsC

I totally agree that the current price is at a nose bleed level. But, ARB has proven itself over many decades to be a prudent investor of capital. Looking at ARB's growth strategy over the short to medium term, my guess is for ARB's share price to go sideways for 3-5 years, i.e. until earnings catch up and make the valuation reasonable again, before resuming its upward trend.

I am more than comfortable for this to happen because the alternative is for me to sell my ARB shares and realise a not insignificant capital gains. When looking for a new place to invest my ARB proceeds, I will always run the risk of entering a lesser quality business and losing my investment capital in the process.

Of more concern to me is, what will happen to ARB after the current MD, Andrew Brown retires. I believe the younger Brown is still in his late 50s, so we still have at least 10 years before we need to consider how much ARB DNA the successor has in his/her blood.

During the AGM this year, both Roger & Andrew were adamant that there will no more Browns who are going to continue their fathers. Roger mentioned that at the moment, there are a few very good young people in the business who they hope will stay around and can preserve the culture that they have worked hard to develop well into the next generation.

Because I've witnessed my share of well run family businesses being run to the ground by "professionals" who supposedly know everything, I'm more concerned about what will happen to ARB after Roger & Andrew Brown retire than the current high PE.