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

To: Madharry who wrote (65673)	12/12/2020 7:41:45 AM
From: bruwin	Respond to of 78958

To: Madharry who wrote (65673)	12/12/2020 9:14:25 AM
From: bruwin	Respond to of 78958

"Softbank could now be worth $75-$100" OK, so here's another possible way of looking at what Softbank may be "worth" or whether its shares are relatively "Cheap" or "Expensive". Buffett has determined that the Stock Market will price a quality company at a level that approximately reflects the VALUE OF ITS EARNINGS RELATIVE TO THE YIELD ON LONG TERM CORPORATE BONDS (L.T.C.B.R). And for L.T.C.B.R. one can use the 10 Year AAA Corporate Bond Rate in that regard, which currently stands at 2.25%. He interrogates its PRETAX EARNINGS and then determines if the purchase is a Good Deal relative to the ECONOMIC STRENGTH of the company’s underlying Economics and its ASKING PRICE. This can be written as the following equation .... SHARE PRICE = Pretax Earnings per Share/( L.T.C.B.R.) So as things stand for SFTBY, in US Dollars, from KOYFIN site :- TTM Pretax earnings = $2 885 000 000 Shares = 2 020 000 000 10yr AAA Corporate Bond Rate = 0.0225 (2.25%) Share price = $(2,885,000,000/2,020,000,000/0.0225) = ~$63/share. Current Share price = $37.64 < $63 .... So it seems that SFTBY may be a Buy at the present time. There could be those who may say that it's a bit expensive based on its current P/E of around 35 seeing as it's average range has been between about 10 and 15. That may be correct up to a point. However, its EPS has fallen in recent times so that has pushed its P/E up. Maybe an idea to hold on for a slight fall off in its price coupled with an improved showing in its Net Income .....