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

To: Triffin who wrote (393)	9/27/1998 3:12:00 PM
From: James Clarke	Read Replies (1) \| Respond to of 4691

A few comments on the valuation. You're double-counting interest. If you're starting with net profit, there is no need to subtract interest because you already have. Doesn't make a big difference for this company, but probably something to check on in your model. You're using a 7% discount rate, where I would use a number of at least 9% - there is no right or wrong answer here. But you are assuming no growth, despite subtracting capital expenditure well in excess of depreciation. That seems too conservative to me. Whether the denominator is 7% or 5-6% makes a huge difference in this kind of valuation. But you have done the thinking required to at least get a number in mind that makes sense. I don't think most of the guys calling a bottom in the 50s have done much analysis.