Brink's Co/The is scored 86 for moat and 48 for management. The management score rests on a return on invested capital of 6.2% and a gross margin of 25.8% — figures that describe returns closer to the cost of the capital behind them. The balance sheet carries debt at 17.74x equity, which magnifies both the returns above and the risk beneath them. The wide moat and mixed management are not the same judgement, and the gap between them is where the argument about this business sits.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 7.3% a year, the rate measured from the filings. The exit multiple assumed is 14.7x. That produces an intrinsic value of $31.88, a 10-CAP price of $106.94 and a payback time price of $119.26, with the value zone set at the highest of the three, $119.26. Today's price of $99.97 sits inside that zone.
The price sits inside the value zone, but the business scores 86 for moat and 48 for management. Cheap and good are different tests, and only one of them is passed here.
| Price | $99.97 |
| Market cap | $4.1B |
| P/E ratio | 23.1x |
| Return on invested capital | 6.2% |
| Gross margin | 25.8% |
| Debt to equity | 17.74x |
| Free cash flow yield | 8.9% |
| Growth rate used | 7.3% |
| Growth rate measured | 7.0% |
| Exit multiple assumed | 14.7x |
| Company | Moat | Buy price |
| Aar Corp (AIR) | 79 | $72.30 |
| Torm Plc-A (TRMD) | 30 | $47.27 |
| Brady Corporation - Cl A (BRC) | 77 | $49.47 |
| Robert Half International (RHI) | 7 | $22.67 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Brink's Co/The rather than accepting ours.