At first glance it looks like a fine firm, and like many fine firms it never seems to get cheap. They have traded at an average of about 41 times trailing earnings in the last decade, give or take. But the recent significant price drop still seems to leave them pretty expensive on conventional measures, no? To be justified, wouldn't one normally want to see more than just good business economics, i.e. a higher rate of growth?

As an unrelated anecdote, I was once quite attracted to Becton Dickenson (BDX), a vaguely similar firm. They had amazingly steady growth through thick and thin throughout their history--up to that time. Then things changed. Cash flow per share has been flat for the last 8 years. I'm not precisely sure what the lesson is, but it *might* be that when you pay a rich price for a bright future, you have to be pretty darned sure that the bright future will arrive. If it does (which it does for the best firms), you're golden.

Jim

Falling Knives FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.