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

To: Spekulatius who wrote (61962)	5/11/2019 8:10:40 AM
From: bruwin	Read Replies (1) \| Respond to of 78751

... yes the EV/EBIT is a valuation, not a quality metric" Yes, ... well .... you have to wonder about some of these "valuation" metrics and the efficacy of some of them. EV is supposed, primarily, to be what one would actually be paying for a company if it was liquidated. As we can see that can vary quite dramatically in the space of ONE month, which doesn't seem to be very realistic or of practical use in the real world. In a way, the Book Value per share is also supposed to be some form of "valuation" metric where one compares it to the current share price to see if there's a "discount". But who knows if one will realize that company's "Book" value if that company was liquidated, bearing in mind how initial entries into a company's Balance Sheet works. So Mr. Carlisle takes a DEFINITE monetary number, EBIT, derived from an audited Income Statement, and divides it into a VARIABLE Number, EV, and thereby produces a ratio that means what ? A ratio that can vary on a DAILY basis. IMO, that doesn't make a lot of "valuation" sense. It reminds me, in some ways, of the revered "Discounted Cash Flow" process. You have this forward prediction, or projection, that is based on an INTEREST RATE that can vary to a relatively uncertain number in the future, and on which the WHOLE CALCULATION IS BASED, and then one is supposed to regard that of some value, bearing in mind that any minor miscalculation of that interest rate has more and more of a "garbage" effect the further forward one is looking. I sometimes wonder as to the depth and understanding of basic mathematics, that individuals have, who come up with some of these "metrics". But there again, I suppose "you pays your money and you makes your choice" .......

To: Spekulatius who wrote (61962)	10/9/2019 2:03:34 PM
From: Nya_Quy	Read Replies (1) \| Respond to of 78751

Ello Spekulatius, In response to some comment I made, Bruwin referred me to this thread, while E_K_S told me the following: It has been suggested many times here by Spekulatius (a very fine value investor here on this board) to use the EV approach. So that makes me think you are a kind of expert on this approach =p... Could be elaborate on the EV approach? Do you, for example, use EBITDA or unlevered free cash flow, or perhaps EBITDA minus maintenance Capex in combination with the EV? Mzzl, Nya Quy P.S. "Limited posting privileges", so this will be my last one for tonight.