High dividend tax rates will cause tax conscious boards not to make that choice, opting instead for other uses of free cash flow such as debt-fueled stock buybacks and acquisitions.
This stock is suitable for conservative investors seeking above-average cash flow.
This gives shareholders the added benefit of an increased stock basis, which may allow the shareholder to utilize flow-through losses allocated from the corporation.
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On a discounted cash flow basis, he adds, the market is valuing the stock as if it will show free cash flow growth of -2% in perpetuity beyond FY 2012.
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Ruby Tuesday 's (nyse: RI - news - people ) improving cash flow should drive the stock higher.
Non-cumulative preferred stock gives a company more flexibility in managing its cash flow.
In the interim, Wellpoint and UnitedHealth sell at 10 times earnings, 10 times free cash flow, lift their dividends, buy back stock and do add-on deals.
These included personal net worth, cash flow and stock option statements, back federal tax returns, W-2s, a company benefits package, various insurance binders, brokerage and 401(k) statements, pension calculations and wills.
Considering the company's cash flow and earnings momentum, the stock appears attractively valued at 15 times expected year-ahead earnings--below the restaurant-sector average of 17.
Seriously, what sane fiduciary engages in an infinitely risky short position of 20-25% of a public company that is buying back its stock feverishly with massive free cash flow, and then paints himself into a corner by both publicizing his outsized position while antagonizing the one investor on Earth who has the will and skill to eviscerate him?
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The stock also looks relatively less expensive according to the price-to-sales, price-to-cash flow (in the sense of net income plus depreciation) and enterprise multiples.
"The stock is oversold, and as the dust settles, the third-quarter earnings will be coming out with cash flow and revenues from Acticoat, and people will value the stock based on that, and probably on the assumption that atopic dermatitis is not going to come back, " says Wolff.
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