Friday, February 8, 2019

Kone Already Getting Ample Reward For Its Quality

Quality deserves a premium, but the market seems to be going overboard with Kone (OTCPK:KNYJY) (KNEBV.HE) (also spelled “KONE”), as this Finnish elevator and escalator company is indeed a high-quality company, but one that seems unlikely to grow enough to justify the valuation. Future service growth in China is a valid driver, as is equipment growth in India and other markets, and I don’t dismiss the possibility of a value-building mega-merger, but the share price already seems to contemplate nearly double-digit free cash flow growth from a company serving a market likely to grow in the low-to-mid single digits.

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Kone Already Getting Ample Reward For Its Quality

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