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To: Paul Shread who wrote (43569)	6/27/2002 11:47:13 AM
From: UnBelievable	Respond to of 209892

Fed Adds Additional $5Billion in 5 Day RPs

To: Paul Shread who wrote (43569)	6/27/2002 2:01:16 PM
From: reaper	Read Replies (1) \| Respond to of 209892

<<Anyone got a good explanation for the 150+ GAAP PE on TRB? >> I don't know if this will qualify as "good"... TRB, after taxes, interest payments, and working capital needs, generates +/- $750mm of cash flow a year. They need to spend about +/- $200mm a year on capex; I don't think this is "growth" capex as much as it is "maintenance"; i.e. what you would need to spend to keep that $750mm from falling. So that's about $550mm of free cash flow a year. Company has a $13 billion-ish equity market cap, or about 24x the free cash that they generate. While this is by no means cheap, it is not outrageously expensive when you consider the stability of that cash flow and the interest environment we are now in. I wouldn't own it (I prefer to pay more like 10x cash flow for stuff; with something of the asset quality of TRB you might convince me to pay 15x in a weak moment) but I can understand why people do. As far as explaining the P/E, I cannot. I don't care EBITDA and P&L earnings; all that matters is cash flow and how much capital is necessary to maintain/grow that cash flow. Cheers