Alex what astounds me about so called analysts is they seem to ignore the obvious. If a company is growing at an exponential rate through acquisitions it will be investing ever increasing amounts in W/C "cash" than comes through the door "cash".
If the argument is that is not sustainable I would agree - there does become a time where a company needs to catch breath and allow its investments (WIP) to catch up. That is where we are at. That is not the argument though - analysts just keep harping on about comparing earnings with Op cash flow in a given year.
Months ago I posted on HC an alternative look at cash flow. I simply moved the 'cash in' side of the equation back one year so it equated with cash outgoings of that year. I did this on the premise that cases typically take up to 18 months (and longer for project work) and there is a mismatch between outgoing and incomings. That mismatch is largely neutralised when growth is organic but not so when growth is a combination of acquisition and organic.
The above exercise painted a remarkably different picture. It made the company look attractive proposition that it is. After we have had a couple of years without acquisition growth the above exercise will be reality as backflow catch up.
MA (mightyatom)
SGH Price at posting:
83.0¢ Sentiment: Buy Disclosure: Held
