We’ve struggled to decipher the real Brambles. Is it a quality business that generates consistently high returns or a capital sink that generates little free cash flow? With both traits on display, passing judgement isn’t easy which is why we’ve dithered without a recommendation for so long.
The acid test of a high-quality business is its ability to generate high returns on capital over a long time. On this measure, Brambles fares well, having consistently generated returns on equity of over 20%.