Quote Originally Posted by Muse View Post
aye there is a lot of good stuff happening. Do I have fear I've missed out (on the upside?) absolutely. Wished I had held on a bit longer with the benefit of hindsight. But I'm also a believer that on occasion its wise to take some chips off the table when you've had a winning hand. Maybe I was a bit influenced by my experience with Liontown (see the LTR thread and my posts on my investment there over the course of my holding). I praise the investment gods I realised my investment at $3/shr with it now at 1.27.

I hear ya on lots of good stuff on long term public infrastructure. That is a double edged sword in some respects. You get to park up your kit for long durations at a time - 100% utilisation on that gear while under contract and often for a large chunk of the fleet. When that contract ends, invariably it takes time to find a home for that kit and utilisation falls as does margins and earnings. It's a contract business at the end of the day and in my view its sort of inescapable the business will experience lulls between major contracts where earnings & divies take material step downs which has the potential to be followed by the SP.

I look at Acrow's end markets and I sort of see lots of end segments, like transport (mainly roading), power (various types of plants, maintenance shutdowns) and construction (apartments, social infrastructure like hospitals, commercial towers etc) and increasingly overwater solutions with their latest acquisition. That diversity is great because hopefully the pistons fire at different times. But I also don't understand the long term outlook for some of them. Roading I am most familar with and I think that is at or near the peak of many infrastructure forecasts, and I believe it to be a big part of Acrow's business.

Faced with these sort of conundrums I often fall back on maintainable earnings and how that compares to spot price. I don't think it fair to assume an average over recent year earnings (say the last 5 years including current year) because they've grown their book a lot. But you take the average return on invested capital over 5 years (operating EBIT / net working capital plus fixed assets), apply that to current invested capital to derive a maintainable EBIT, take off current year net interest and tax to get a sort of 'through the cycle' NPAT.

I didn't do that, as I sort of know the sort of number & multiple it would produce.

A bit of a meandering post. Just a flicker of my thought pattern. Don't take this as me poo poo'ing the company by any means, as I said previously I had a lot of various reasons to sell down. Happy to leave some on the table for the next guy and gal. Business has my obvious respect, as do all you fine Acrow shareholders.

EDIT: sorry last thing that had crossed my mind, but the upgrades stopped. That seems like a silly thing to say, the company has issued many and looks set to achieve its latest guidance. But the tempo of steady upgrades has slowed. In my little suspicious mind, I started to wonder what that meant.
Thanks Muse, I do appreciate your thoughtful post - living up to your moniker.
I think the modest valuation allows for growth well below what's been achieved over recent years.
Regardless, some friendly debate with smart investors like you is invaluable.