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Strategies & Market Trends : Free Cash Flow as Value Criterion -- Ignore unavailable to you. Want to Upgrade?

To: Pirah Naman who wrote (89)	11/2/1997 11:19:00 AM
From: jbe	Read Replies (3) \| Respond to of 253

Pirah, you write: "Impossible to have great free cash flow without great cash flow." Why not? If you can have great cash flow with lousy free cash flow (my favorite example being the oil drillers), why can't a company with good cash flow (here I'm not saying lousy) have much better free cash flow, relative to the price you are paying to buy its stock? For example: if a company has no capital expenditures at all, and all the other companies do, its price/FCF ratio is likely to be lower than its price/CF ratio. I have a long list of companies whose price/FCF ratios are lower than their price/CF ratios. Of course, it was garnered from sources that you consider suspect. HOWEVER. before concluding that the sources I have been using are "clearly wrong," you might check them out first yourself. (I would include the Telescan Pro-Search platform -- when its free cash flow parameter gets fixed, that is.) After all, neither the S&P reports (which I, too, should be getting free from Waterhouse!!) nor Value Line actually give free cash flow numbers -- you are calculating those yourself from the operating cash flow numbers they provide. Meanwhile, when and if I get the TIME (oh, scarcest and most precious of commodities!), I am going to do a research job to find out just why and just how we are getting all these discrepancies. P.S. That www.msrn.com address you gave took me to a website for microcaps, and the only thing I turned up searching for Deloitte and Touche was a web page for small business owners. (You see, I check out the sources you mention!)