The nice thing about having low capital spending, is the pleasant surprise it creates. You find a company that is earning more (economically) than other companies with the same GAAP numbers. So, the P/E ratio tends to exaggerate how expensive the business is.
This is kind of like finding a business with excess cash. While it's true that a business can have too much cash from an efficiency point of view, finding more cash on the balance sheet than you expected is always a good thing, right? The point in each case is that the headline numbers (EPS, P/E, etc.) sometimes lie - and an inordinate number of bargains are found where such "lies" exist – simply, because others aren’t looking there (it’s a less conspicuous bargain).
This is kind of like finding a business with excess cash. While it's true that a business can have too much cash from an efficiency point of view, finding more cash on the balance sheet than you expected is always a good thing, right? The point in each case is that the headline numbers (EPS, P/E, etc.) sometimes lie - and an inordinate number of bargains are found where such "lies" exist – simply, because others aren’t looking there (it’s a less conspicuous bargain).
