I've watched a few of your videos. What I love most is how easy it is to understand what you are saying and to be able to apply it quickly in my investing strategies. Thank you
If the company is a small cap and has growth potential of 2x next year the PE even if currently 100 would be halfed. I say market is always future looking growth.
“ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment, and finally, multiplying it by 100.” 136% = ((47.20-20)/20)x100 55.5% = ((15.50-10)/10)x100
Very straight forward what I'm still trying to understand is. If I owned the bakery that generated the 50k per year. I would recieve income as well as still owning the asset. But if I buy stocks even though the EPS says that the company is generating X income per share. I the investor do not recieve any income. I can only hope for the stock price to increase.
If you own the whole bakery that generates 50k net income you have the choice to declare a dividend for 50k and pocket that money but you also have the option to pay down corporate debt if applicable, reinvest, open another bakery etc. as the 100% owner you will do what is in your best interest considering the long term not just this year. Same thing happens with a public company but it’s the ceo making these decisions on your behalf because that’s the guy the owners hired to do that.. sometimes a dividend is in the best interest of the shareholders, sometimes it’s not. Often it’s not. If you conclude the ceo is not acting in your best interests you should sell your shares (or never buy in the first place). Share price will follow intrinsic value of the long term you just have to trust and have faith in this truth.
We can see historical growth rates and make conservative guesses. I think it’s actually better to look at a companies historical returns on capital though. Some other videos on here I talk about return on capital.
I don’t understand the question however it’s good to look at the companies historical returns on capital. Something companies can reinvest a high returns. Other companies need to sink most of their cash into staying where they are.
Great information regarding that there is more to it the just looking at the PR ratio. And the importance for net income vs gross income. Thanks for all the great information.
Hi. For example, the situation is as follows: I am seeking financing to acquire a business. I approached a potential investor who asked several questions, one of which was: What is the Debt/Equity ratio of financing? Now, I'm wondering and feeling confused about what the potential investor means by asking this question. Is "Debt/Equity ratio of financing" the same as "Debt/Equity ratio," or is it something else?
Noted. Thanks. I'm naturally pretty low energy and a slower speaker so I'm trying to find a balance of upping the energy to keep people engaged but also stay authentic. I'll find the sweet spot eventually :) thanks for your support!
Thanks for sharing this key fundamental. I have trouble still on which value to use for earnings. It seems like their are so many values after adjustment. New subscriber here!
Glad it was helpful! Yes I hear you. Sometimes a metic like Enterprise Value / Free cash Flow can be a better choice. Buffett's "owner earnings" is also worthwhile but you'll need to calculate that for yourself because it's not on financial websites. Thanks for the support.
Company B Growing by 5% Year 1: $1.00 EPS Year 2: $1.05 Year 3: $1.1025 Year 4: $1.157625 Year 5: $1.21550625 Year 6: $1.2762815625 Year 7: $1.340095640625 Year 8 $1.40710042265625 Year 9: $1.477455443789063 Year 10: $1.551328215978516 I rounded it down to $1.55 per share. IF the shares are STILL trading at 10X earnings on the market, that would translate to a share price of $15.50. For company A growing by 10% Year 1: $1.00 EPS Year 2: $1.10 Year 3: $1.21 Year 4: $1.331 Year 5: $1.4641 Year 6: $1.61051 Year 7: $1.771561 Year 8 $1.9487171 Year 9: $2.14358881 Year 10: $2.357947691 I rounded it up to $2.36 per share. IF the shares are STILL trading at 20X earning on the market, that would translate to a share price of $47.20. Hope this helps.
@@IntelligentStockInvesting yes thank you so much now I understand everything, but why don't you make more videos? I saw a couple of them you are doing a great job
@@grishi493 The time investment isn't worth it for me right now. I will make videos again someday but for now, I'm busy with other things. Still investing my own money of course.
That's kind of the job you're signing up for when you decide to buy business (stocks). And it's why you want to also be very conservative with your estimates so that there is a "margin of safety" AKA lots of room for you to be wrong and still wind up on top. Thanks for your comment :)
The forward P/E ratio is a current stock's price over its "predicted" earnings per share. Not sure who’s making these predictions.. Earnings per share growth rate you just look at what earnings per share was 3-5 years ago compared to now and determine the rate at which it has grown annualized.
