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Evaluating Companies with Financial Metrics   Speaker Position Company smart woman securities © 2010 Smart Woman Securities.  Materials are for SWS members’ use only. All rights reserved. Date
Announcements ,[object Object]
Last Seminar Recap ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Tonight’s Agenda ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
This Week’s Seminar ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Market Update ,[object Object],[object Object]
Market Update Example Slide ,[object Object],[object Object],[object Object],[object Object],[object Object]
Income Statement  Financial Metrics
What They Tell Us ,[object Object],[object Object],[object Object],[object Object]
Growth Metrics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Revenue Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Operating Income (EBIT) Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Earnings per Share (EPS) Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Margin Metrics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Margins across Industries ,[object Object],[object Object],[object Object],[object Object]
Gross Profit Margin ,[object Object],[object Object],[object Object]
Operating Profit (EBIT) Margin ,[object Object],[object Object],[object Object]
Net Income Margin ,[object Object],[object Object],[object Object]
Comparing I/S of 2 companies: ,[object Object],STARBUX (SBUX) Revenue Growth -3% 20% Gross Margin Gross Profit/Revenues 85% 57% Operating Margin Operating Profit/Revenues 40% 10% EPS Growth 6% 21%
Strong Income Statement ,[object Object],[object Object],[object Object],[object Object],[object Object]
Weak Income Statement ,[object Object],[object Object],[object Object]
Balance Sheet  Financial Metrics
What They Tell Us ,[object Object],[object Object],[object Object]
Current Ratio ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Return on Equity (ROE) ,[object Object],[object Object],[object Object],[object Object],[object Object]
Return on Assets (ROA) ,[object Object],[object Object],[object Object],[object Object],[object Object]
Return on Invested Capital ,[object Object],[object Object],[object Object],[object Object],[object Object]
Debt-to Equity ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Comparing B/S of 2 Companies Pfizer (PFE) Tyson  (TSN) ROA (Net income/Total Assets) 13% 3% ROE (Net income/ Shareholders’ Equity) 22% 6% Debt/Equity 11% 67% Current Ratio (current assets/current liabilities) 2.2x 1.9x
Strong Balance Sheet ,[object Object],[object Object],[object Object]
Weak Balance Sheet ,[object Object],[object Object],[object Object],[object Object]
A Note on Ratios ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
A Note on Ratios ,[object Object],[object Object],[object Object]
Valuation Metrics
Intrinsic Value ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Multiples as Shortcuts ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Common Multiples ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What is P/E Valuation? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What do we use Valuation for? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Why P/E? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What is P/E? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Value vs. Price ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Colgate Example ,[object Object],[object Object],[object Object],[object Object],[object Object]
Example: Using P/E to determine the future stock price ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
P/E Ratio ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
One Very Helpful Valuation Trick ,[object Object],[object Object],[object Object],[object Object]
Valuation, Price, and EPS
P/E & EPS Growth Drive Stock Price ,[object Object]
P/E & EPS Growth Drive Stock Price ,[object Object]
WFMI’s P/E has collapsed EPS has increased! P/E has been cut in half ,[object Object]
Why is This Important? ,[object Object],[object Object],[object Object],[object Object]
How do we Get to a Target Price? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Seminar Recap ,[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Coming Up

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Seminar 7 evaluating companies with financial metrics

  • 1. Evaluating Companies with Financial Metrics Speaker Position Company smart woman securities © 2010 Smart Woman Securities. Materials are for SWS members’ use only. All rights reserved. Date
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  • 22. Balance Sheet Financial Metrics
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  • 29. Comparing B/S of 2 Companies Pfizer (PFE) Tyson (TSN) ROA (Net income/Total Assets) 13% 3% ROE (Net income/ Shareholders’ Equity) 22% 6% Debt/Equity 11% 67% Current Ratio (current assets/current liabilities) 2.2x 1.9x
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Notes de l'éditeur

  1. Ask yourself a question, “Why do you invest?” “ What is it you truly want to win?” Winning should be reaching your goals, having the financial capacity to achieve your life goals … … not anyone else’s. Remember, you want to build a financial house that won’t fall down in a strong wind. To do that, you need to start with a plan -- a blueprint. And one of the best plans around is asset allocation.
  2. Ask yourself a question, “Why do you invest?” “ What is it you truly want to win?” Winning should be reaching your goals, having the financial capacity to achieve your life goals … … not anyone else’s. Remember, you want to build a financial house that won’t fall down in a strong wind. To do that, you need to start with a plan -- a blueprint. And one of the best plans around is asset allocation.
  3. Ask yourself a question, “Why do you invest?” “ What is it you truly want to win?” Winning should be reaching your goals, having the financial capacity to achieve your life goals … … not anyone else’s. Remember, you want to build a financial house that won’t fall down in a strong wind. To do that, you need to start with a plan -- a blueprint. And one of the best plans around is asset allocation.
  4. Earnings = Net Income - At the end of 2002, the S&P 500’s PE reached a high of 32-33 but has been slowly and steadily declining since then to its current level of around 17