Cost Structure Begins Unnecessary Rise
May 20th, 2010
We have noticed a very broad trend on the part of firms which have, over the past three quarters, shown good growth in free cash flow, especially when associated with moderate top line growth, to begin to pick-up their cost structure.
New growth initiatives, share buy-backs, and increases in SG&A, do not bode well for free cash flow later in the year. If this expected growth does not materialize, the stocks of these companies would give back much of the gains seen over the past year and a half.
Categories: General
