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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (61958)5/11/2019 4:38:08 AM
From: bruwin2 Recommendations

Recommended By
E_K_S
William Cloutier

  Read Replies (1) of 78743
 
" ...based on EBIT/EV, which is Tobias Carlisle acquirers multiple ... "

I can understand that ENTERPRISE VALUE (EV) may be a good indication of what the Liquidated Value of a company could be at "a particular moment in time", but it seems to me that it has its Flaws when used as part of a Fundamental Value calculation.

If one considers how it is made up ......



.... we see that it has to have the company's Current Share Price included in its calculation. Now that could vary quite considerably at "a particular moment in time" as one can see in the following .....



..... One would have got very different EV values within the 2 month period between the share prices at "1" and "2", and in the 1 month period between "4' and "5".

And that is not taking into account that the company may also have issued MORE shares in that period, or have BOUGHT BACK some of its own shares, thereby affecting that "number of outstanding shares" component.

Seems to me that if one is going to scrutinize a company from a Fundamental Analysis perspective then maybe one should only consider aspects, or components, from within that company's Financial Statements, preferably the Audited ones, and not use a number that could vary on a daily basis .......
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