Folks:
Where can we find management’s forecast for capital expenditures? Let’s consider both public and private company.
Research reports, or ask the company. Generally not disclosed in a usable format in most industries. Some oil and gas companies are good at disclosing this as it’s a big driver of production growth and an analyst needs to be able to see if they’re generating enough FFO to over CapEx needed to sustain/grow production.
Outside of oil and gas, I haven’t really seen good disclosure consistently.
Thanks! Is there a way by which we can derive it? Would MD&A help?
On the oil and gas side, MD&A is a great place to look. Also a reasonable place for other industries IF its disclosed. Now that I think of it, many utilities will disclose some kind of capex forecast. I still don’t think its common in general though, unless its a major project. If you have to guess, look at asset replacements based on the life of existing assets and replacement values. Then the cost of whatever expanded capacity they may speak of elsewhere. If a manufacturer is going to increase revenue by 10% bases on higher units, then there is likely a capital cost assuming no significant underutilization. Just some thoughts.
Typically you will straight line it as a % of revenue nigga with a bump for special disclosed projects.
Do you think we can get a picture from the historical financial statements? Typically, an industry, especially for public companies, spend CapEx ina proportion to their Sales and EBITDA. Can this be a good technique to assume their spend?
You can do a common size statement analysis to see if there are trends. If there isn’t any trends you can determine, well you know its a dead end. If there are, then maybe you have something to go with.
Thanks!
While this can be a new topic, but need a quick answer on this. Would appreciate your thoughts on it.
What are the fundamentals that drive the technology industry (computer software and hardware)? How do they make money? While I’m aware of the metrics like supply and demand, price, labor, capital, real-estate, is there any other metric that I should aware of?
You can sometimes find info in the MD&A but this is really where business common sense comes into play. In some instances, Capex can scale with revenues more or less proportionately. In cyclical or heavy capital intensive businesses like manufacturing facilities, it is much more likely to ebb and flow.