You would probably do well to download the model, email me and I'll see if I can export it in a suitable format.
To begin with, I do not believe in sales as an accurate barometer of performance, see my previous post for the reasons (I included it in the model since it is widely followed).
The average close price divided by sales per share is an integer. Multiply this integer by the consensus estimated sales per share, and compare it to the actual price as a proportion and you get a %.
< the ratio of estimated SPS / SPS (nominally, one)>
I can estimate the SPS to be 10, and the current SPS is 5, 10 / 5 does not = 1, but = 2. The resultant valuation changes as the estimated # changes. Whatever the number is, when divided into the actual price, you get a percentage.
< Is it fair to say that MSFT is a good or bad buy solely because of inaccurate estimates of SPS>
I have not attested to the accuracy of the SPS model (or the EPS model for that matter). If you read my two rather lengthy posts, you will see that I believe any method that adheres to accrual accounting methods is misleading. The standard/traditional valuation methods are included in the model as benchmarks. The Economic Value Added (net after tax return on assets minus total cost of capital) method is the most accurate detrminant of value, IMHO. This is included in the model in both a numerical and graphical format, and is emphasized as the preeminent measure. I am also a strong follower of free cash flow and discounted cash flow models, which I plan to share, in due time. |
