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

To: Spekulatius who wrote (62309)	8/3/2019 8:20:21 AM
From: bruwin	Read Replies (2) \| Respond to of 78702

"WMB now trades at the same EV/EBITDA ratio" With regard to your comment and the reference to the EV/EBITDA ratio, I took a look at WMB's price history ..... What caught my eye were the MAJOR price fluctuations within relatively short periods of time, anywhere between only 2 and 5 months. Seeing as a company's Share Price is a major component of its EV calculation, I did some analysis using the 8 extreme prices in its chart. I incorporated WMB's financial info from its Quarterlies closest to those 8 share price dates. I didn't go too deeply into the makeup of Total Debt, just used the Long Term Debt number, and Cash Equivalents. EBITDA was based on the relevant 12 month accumulation. All of that got put into a spreadsheet ......... What caught my eye was the relatively large percentage differences that occurred between subsequent EV values as well as between subsequent EV/EBITDA ratios. Between share prices "1" and "2" the ratio falls by over 10%. Then 2 months later it goes up by 34%. Then 3 months later down by 9%, then up by ~16%, then down by ~25%, then 3 months later up by 59%, etc .... And similarly with the actual EV value of the company. In only 2 months, between prices "2"and "3", the Enterprise Value, i.e. the "takeover price" of a company, went up by ~$5.7 Billion. And only 3 months later its EV "takeover price" fell by ~$8.1 Billion ?! How do you decide what a realistic EV value is for WMB and what its comparative EV/EBITDA ratio should actually be, seeing as the fluctuating share price of this company results in these fairly large varying results over relatively short periods of time ?