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Free cash flow
13-02-2020, 07:07 AM. (This post was last modified: 13-02-2020, 07:19 PM by cyclone.)
Post: #1
Free cash flow
Hello Everyone, 
i just came across a firm with free cash flow greater than mkt cap. net debt is 4x mkt cap. huge net loss.

would u consider this firm a bargain? hope to hear yr views.
just to add that cash balance>4x mkt cap
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To be simple is the best thing in the world; to be modest is the next best thing. I am not sure about being quiet.- G.K. Chesterton

Do not condemn the judgment of another because it differs from your own. You may both be wrong.- Dandemis

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13-02-2020, 11:57 AM.
Post: #2
RE: free cash flow
That depends on how fussy of a buyer you are. Some buyers only have 1 or 2 boxes to check. Others may have more.

The market is efficient, but not always. The only way to know whether you are right is to look at everything about the stock.

Anyway, you'll probably get better responses if you share more about the stock in question.

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13-02-2020, 12:19 PM.
Post: #3
RE: free cash flow
Free cash flow > market cap.
Net debt 4x market cap.
Cash balance > 4x market cap.
Huge losses.

Not your usual co. Never see one in all my years. Certainly need more info than these numbers

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13-02-2020, 12:26 PM.
Post: #4
RE: free cash flow
(13-02-2020, 12:19 PM)donmihaihai Wrote: Free cash flow > market cap.
Net debt 4x market cap.
Cash balance > 4x market cap.
Huge losses.

Not your usual co. Never see one in all my years. Certainly need more info than these numbers

Correction. Not your usual co. And valuation

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13-02-2020, 04:13 PM. (This post was last modified: 13-02-2020, 04:18 PM by port.)
Post: #5
RE: free cash flow
FCF/EV=24%
total long term debt=8.8x mkt cap
P/S=0.07
P/B=1.4
spent $10m on share buyback
=========== Signature ===========
To be simple is the best thing in the world; to be modest is the next best thing. I am not sure about being quiet.- G.K. Chesterton

Do not condemn the judgment of another because it differs from your own. You may both be wrong.- Dandemis

The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.- Bertrand Russell

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14-02-2020, 05:33 AM.
Post: #6
RE: Free cash flow
the firm is us listed known as FTS international, a pressure pumping firm serving the fracking industry. temasek is major shareholder. its ipo a few years back at 18 per share
=========== Signature ===========
To be simple is the best thing in the world; to be modest is the next best thing. I am not sure about being quiet.- G.K. Chesterton

Do not condemn the judgment of another because it differs from your own. You may both be wrong.- Dandemis

The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.- Bertrand Russell

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14-02-2020, 08:20 PM.
Post: #7
RE: Free cash flow
I took a short glance at it.

market cap (14 feb): $120m

book value: $38m
net debt: $233m

FY19 net profit: -$73m
FY18 net profit: $258m

Company provides fracturing services so it is exposed to oil and gas prices. FCF is positive for FY19 in spite of losses because capex was only about half of depreciation. They may delay capex during loss periods to shore up cash flow. But I'm not sure how long their PPE can hold out.

Considering the book value, net debt level, and heavy reliance on oil and gas prices, its current share price does not look cheap to me.

There may also be a safer way to bet on oil and gas prices, I believe.

In any case, the share price rallied strongly just a day after you first post. So I guess your question is now moot?

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14-02-2020, 08:37 PM. (This post was last modified: 14-02-2020, 08:37 PM by CY09.)
Post: #8
RE: Free cash flow
HI Port,

As good posting practise, appreciate if you can give a summary of the company straight up as your first post and not keep in suspense.

In addition, please avoid posting bits of information post by post. I have merged two post together, given the short time they were posted in succession

<moderator.

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14-02-2020, 10:29 PM.
Post: #9
RE: Free cash flow
(14-02-2020, 08:20 PM)karlmarx Wrote: I took a short glance at it.

market cap (14 feb): $120m

book value: $38m
net debt: $233m

FY19 net profit: -$73m
FY18 net profit: $258m

Company provides fracturing services so it is exposed to oil and gas prices. FCF is positive for FY19 in spite of losses because capex was only about half of depreciation. They may delay capex during loss periods to shore up cash flow. But I'm not sure how long their PPE can hold out.

Considering the book value, net debt level, and heavy reliance on oil and gas prices, its current share price does not look cheap to me.

There may also be a safer way to bet on oil and gas prices, I believe.

In any case, the share price rallied strongly just a day after you first post. So I guess your question is now moot?
Hello Karlmarx,

Thanks for taking the time to look through the financials. My initial concern was that ftsi was trading below 1 usd and risk being delisted from NYSE. 
I have a large margin of safety after the run up in price yesterday. My estimate is that it will be able to service its annual interest expense of abt 30m and hopefully emerge from this prolong downturn intact.
=========== Signature ===========
To be simple is the best thing in the world; to be modest is the next best thing. I am not sure about being quiet.- G.K. Chesterton

Do not condemn the judgment of another because it differs from your own. You may both be wrong.- Dandemis

The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.- Bertrand Russell

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14-02-2020, 10:30 PM.
Post: #10
RE: Free cash flow
(14-02-2020, 08:37 PM)CY09 Wrote: HI Port,

As good posting practise, appreciate if you can give a summary of the company straight up as your first post and not keep in suspense.

In addition, please avoid posting bits of information post by post. I have merged two post together, given the short time they were posted in succession

<moderator.

Hi CY09,

Thanks for the reminder. I will take note.
=========== Signature ===========
To be simple is the best thing in the world; to be modest is the next best thing. I am not sure about being quiet.- G.K. Chesterton

Do not condemn the judgment of another because it differs from your own. You may both be wrong.- Dandemis

The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.- Bertrand Russell

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