Beyond Earnings: Applying the HOLT CFROI and Economic Profit FrameworkBeyond Earnings is targeted at investors, financial professionals, and students who want to improve their ability to analyze financial statements, forecast cash flows, and ultimately value a company. The authors demonstrate that reported earnings are easily gamed by accounting shenanigans and reveal how commonly used profitability measures such as return on equity can be misleading. Because earnings and P/E ratios are too unreliable for valuation, this book takes you beyond earnings and shows you how to apply the HOLT CFROI and Economic Profit framework in a step-by-step manner. A better measure of profitability results in improved capital allocation decisions and fundamental valuations. This ground-breaking book offers the first practical in-depth discussion of how profitability and growth fade, and shows how to put this information to work right away. The authors introduce their trailblazing Fundamental Pricing Model which includes fade as an adjustable value driver and can be used to value the impact of business model disruption. As the authors explain, the key to superior stock picking is understanding the expectations embedded in a stock’s price and having a clear view of whether the company can beat those expectations. The HOLT framework has been rigorously field tested for over 40 years by global investment professionals to help them make better stock picks and by corporate managers to understand the expectations embedded in their stock price. Beyond Earnings is an indispensable guide for investors who want to improve their odds of outperforming the competition. |
From inside the book
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... CFROI is a useful framework through which we can compare a stocks market valuation versus what the economic enterprises cash flow prospects are ultimately likely to support, and this book does a great job explaining it in a plain ...
... (CFROI) and Economic Profit. Holland and Matthews bring these abstract concepts to life, as they apply them to real world examples of publicly-listed companies. They show that, as well as helping to judge the effectiveness of corporate ...
... CFROI a Better Measure of Performance? Return on Invested Capital (ROIC) Cash Return on Gross Assets (CROGA) Cash Flow Return on Investment (CFROI) CFROI Adjustments Using Amazon's 2013 Annual Report Inflation-Adjusted Gross Investment ...
... CFROI above 9.3%. This placed the odds of success at 1-in-4 (0.2/0.8). But, instead of just meeting expectations, Starbucks brewed profits well above this level, pushing CFROI over the brim toward 12%. This success was unanticipated ...
... CFROI g: Growth in book equity Growth in invested capital Real growth in IAGI r: Cost of equity, r. Weighted-average cost of Real cost of capital, HOLT capital (WACC) DR f ROE fades to r. ROIC fades to WACC CFROI fades to HOLT DR ...
Contents
Discounted Cash Flow and Economic Profit Valuation | 111 |
Value Driver Forecasting | 255 |
Index | 363 |
EULA | 384 |