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Strategies & Market Trends : Value Investing

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To: Kapusta Kid who wrote (38212)	6/7/2010 10:31:25 PM
From: Spekulatius	Read Replies (2) of 78702

re EME -your calculation is correct but you are drawing the wrong conclusions from it, imo. By adding the changes in working capital to the FCF, you are adding a one-off factor and include this in yoru yield calculation. Now let's just play this through and assume that EME's business recovers and revenues are up 20% in Y2011 and receivables likewise. Now you need to subtract 230M$ (roughly) from your FCF yield - which is then probably about 50-100M$, not more. So now you are selling your shares to to lack of FCF? I will gladly buy them for 20$ in this situation. This is generous because my FCF will be very low (5-7%), right?

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