Net of Cash as crude valuation method
Posted: October 14th, 2019, 5:05 pm
Hi all,
I finally cut my losses on Zytronic (ZYT), the SP has stumbled more and more since a couple of recent warnings. I'm also learning that small AIMs aren't really for me! Anyway, while I was umming and ahhing about what to do first thing this morning I googled for more info. From here:
https://uk.advfn.com/stock-market/londo ... share-chat
in a few of the posts, people were saying things like:
"it's been on 10x net of cash for quite some time"
"Net of cash the P/E is about 10 I reckon so not excessively cheap"
Can someone confirm that I'm right in guessing that this is another valuation technique, that is,
Price i.e. Market capitalisation = 10 (in this case) x Net Operating Cash Flow
i.e. we use net CFO not net income as the metric, in other words P/NetCFO not P/E?
I did briefly check this hypothesis out by reference to the date of posts, the SP at that time, the NetCFO and the number of issued shares and it seemed about right. Does that sound correct or am I missing something?
thanks Matt
I finally cut my losses on Zytronic (ZYT), the SP has stumbled more and more since a couple of recent warnings. I'm also learning that small AIMs aren't really for me! Anyway, while I was umming and ahhing about what to do first thing this morning I googled for more info. From here:
https://uk.advfn.com/stock-market/londo ... share-chat
in a few of the posts, people were saying things like:
"it's been on 10x net of cash for quite some time"
"Net of cash the P/E is about 10 I reckon so not excessively cheap"
Can someone confirm that I'm right in guessing that this is another valuation technique, that is,
Price i.e. Market capitalisation = 10 (in this case) x Net Operating Cash Flow
i.e. we use net CFO not net income as the metric, in other words P/NetCFO not P/E?
I did briefly check this hypothesis out by reference to the date of posts, the SP at that time, the NetCFO and the number of issued shares and it seemed about right. Does that sound correct or am I missing something?
thanks Matt