RE: Directors buying28 Oct 2024 12:23
They are highly profitable, few people seem to get it, because they don't know how to treat leases and capital expenditure. XPF reinvests cash earned at a rate of 40%+ and you buy XP Factory at a 20% FCF yield. If you can do some basic math you know where cash will be in 1-3 years and where the stock could be. Owner-operated businesses trade sometimes at 5x FCF, but you rarely find business with ROCEs of 40%+ trading at such levels. People also don't get the economics of local store businesses, because they compare them to recurring revenue businesses what they obviously are not. For local store business it's all about occupying high-footfall territory and once you are settled there, people will come.