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#1
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Re: BUD - Fools Duel
Growth is only one component of value.
The company's stock market value is $33.4 billion. It returns $2.6 billion per year to shareholders via stock repurchases and dividends. That's a 7.8% rate of return right there. When you consider that the value of assets in place will increase at the rate of inflation and that unit volume will increase (slowly) over time, it looks like a (nominal) rate of return of 11-12% over the long haul is pretty much a slam dunk. And it's not as if shareholders need to bear a lot of risk to earn that return. Market share leadership, brand name recognition, partnerships with key equity investees, the best distribution network in the biz, shareholder-oriented management that displays skill and restraint in deploying capital, etc etc. |
#2
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Re: BUD - Fools Duel
[ QUOTE ]
When you consider that the value of assets in place will increase at the rate of inflation [/ QUOTE ] Since when do assets increase in value? Assets decrease in value through wear and tear and/or becoming obsolete. |
#3
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Re: BUD - Fools Duel
If retained earnings are used to keep the plant and equipment in working order, the beer-making capacity of BUD's capital stock should stay about the same as time passes. And the nominal value of that plant & equipment will increase because the nominal price of its output (beer) will increase.
Obviously, vats used to make beer will eventually wear out. But I would hazard a guess that they will retain their usefulness to a greater degree than, say, the machines used to make panels for Dodge trucks. It's not as if all capital equipment wears out at the same rate, whatever GAAP rules on depreciation may say. |
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