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Strategies & Market Trends : The Art of Investing

PICK 52.34

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Jan 2 4:00 PM EST

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To: rich evans who wrote (695)	5/18/1999 12:35:00 PM
From: Sun Tzu	of 10719

In a way yes. Actually, it is closer to a forward Price/EBIT/GrowthRate ratio (sort of a PEG ratio). My full model is more complex in that I also values companies with higher margins a bit more than those with lower margins as well as some other factors. I've also found that too many companies use various accounting methods to boost their earnings number. As a result, my growth model discreminates against companies with little revenue growth. I don't know how much of the related posts you have read, but I can't always come up with forward numbers. So I use extrapolation, peer comparison, and technical analysis to estimate the forward numbers in my initial computer runs. The bottom line is that so long as you use this method to compare companies that are roughly similar, you have a valuable tool in comparing one company to another, no matter how you do your estimates. Sun Tzu

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