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Strategies & Market Trends : Value Investing

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To: Q. who wrote (11939)	1/22/2001 11:17:42 PM
From: TimbaBear	Read Replies (1) of 78638

The problem I have with using Enterprise Value for anything is that it is derived from Market Capitalization. Market Cap is simply share price times number of shares outstanding. If the stock is popular(like the dot bombs were), we could be talking a vastly out-of-whack market cap. Additionally, EV uses debt in its calculation as well, so a company that pays off its debt has a potentially lower EV for being prudent. Enterprise Value has too many flaws for me to use it yet. It is one of the calculations I've built into my spreadsheet, thinking I may find a use for it somewhere down the road, but I haven't found one yet. As far as Daimler Chrysler is concerned, I think they go lower before they give up altogether. They are trying to apply European business thinking to an American enterprise and very few are successful at that. If they would have kept American management throughout, they might have had a chance, but they've got it all screwed up right now from what I can see. I'm going to wait until either they get their management act together or sell it. Timba

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