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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (11939)	1/22/2001 11:17:42 PM
From: TimbaBear	Read Replies (1) \| Respond to of 78633

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

To: Q. who wrote (11939)	1/23/2001 1:31:37 AM
From: Bob Rudd	Respond to of 78633

Ñ wrote<<By this standard, BMW is not the cheapest stock around, but neither is it very expensive. Its 2001 EVR of about 4 compares with 3 for VW, 3 for DaimlerChrysler>> I'd rather have BMW @4 or VW @ 3 than DAJ @3, cause BMW & VW aren't stuck on the side of the road with 'mechanical problems' I suspect DAJ has internal cultural problems with the merger that won't be fixed quickly and it may have some marketing problems with the Germans taking over the US operation. All this in a company with high fixed costs & 2x debt to equity going into what could be a mild global recession with excess industry capacity. Kerkorian is bailing biz.yahoo.com [and suing for $8 Billion] after sticking with Chrysler in some tough times. I don't have a clue what problems VW or BMW could be facing, but I can't believe they would be bad enough to justify parity with DaimlerChrysler.