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Equity Valuation Techniques
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Message Icon Topic: Value Stocks - What to look out for? Post Reply Post New Topic
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Vivek Sukhani
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Quote Vivek Sukhani Replybullet Posted: 26/Apr/2009 at 3:58pm

If investing is both a science as well as an art, then the mathematical part forms the science part and the other qualitative aspects form the art part. We have to position ourselves in-between the two extremes although we have a significant leaning on one aspect.

From the understanding point of view, I find the Grahamian approach far more lucid.
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basant
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Quote basant Replybullet Posted: 26/Apr/2009 at 4:31pm
Originally posted by chaudhuris

Agreed that Graham had a fairly mathematical approach to his stock picking and he developed his net-net concept in the same way as well.

What you are saying is an assumption based on Graham's mathematical approach. I am not sure if Graham would say that get your data from Value Line or Bloomberg or just the 3-4 pages of the annual report comprising the P&L, the Balance Sheet and the Cash Flow. The reason is that several companies play around with accounting standards and try to fudge data. That can have impact on how you calculate PE or PB or FCF/FCFE and other ratios. That is why Buffett, Munger, Whitman and other value investors always read annual reports from start to finish along with ARs of competitors.

Graham's concept of intrinsic value of stock may also be calculated in different ways. Bruce Berkowitz in his recent interview shows some interesting perspectives on stock valuation through his example of Hertz Rental.
 
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vijayM
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Quote vijayM Replybullet Posted: 31/Oct/2010 at 8:58pm
Basant Sir,

I have a query on consolidated results and standalone results.

While calculating P/E or other such ratios, should we consider standalone eps or consolidated eps? In some cases there is a huge difference in these values.
If a business does well, the stock eventually follows:Warren Buffett
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basant
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Quote basant Replybullet Posted: 31/Oct/2010 at 9:15pm
Always Consolidated!
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