Share Price Fall, page-98

How to answer this question.

On the one hand FLT is an incredible generator of free cashflow. If you were basing your decision on today's FCF, you would have to say that at today's prices (let alone at $27), it is a screaming buy (imo).

It has always operated with a negative working capital balance, and generated a huge amount of cash. If you look at the capital that has been consumed by its growth, it has amounted to SFA. In fact, it has been paid to grow! And that's despite the fact that an increasing share of that growth has been coming from OS, where margins are much poorer.

On the other hand, there's the issue of how much longer people will keep using FLT's traditional services, in the face of continuing technological and demographic change.

Then there's the question of how FLT will react to the threats. Will it invest more in the online space, and thus go down a path of disappearing margins? Or will its path of travel retailer (as distinct from agent) mean its capital consumption leads to profitless growth?

If I was much smarter, I'd be able to estimate the odds of each scenario (perhaps) and the associated returns, and I'd be able to give you some value estimates.