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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... Value Driver Applying the Fundamental Pricing Model Final Thoughts for the Moment Chapter Appendix Valuation ... Present Value? How Should Investors Think about Risk When Discounting Cash Flows? How Large Is the Equity Risk Premium (ERP)? ...
... present value of future cash flows, we'll take the cash flows.” Treating Amazon's research and development (R&D) cost as a long-term investment instead of an accounting expense provides a completely different perspective on the ...
... Discounted Cash Flow and Economic Profit Valuation Chapter 4 shows how to value a firm. The present value of free cash flows, not earnings, is the ultimate measure of a firm's intrinsic worth. Companies that earn returns on investment ...
... Value driver forecasting to improve fundamental valuation and stock picking Return on equity (ROE) is a poor measure ... present value of future economic profits equals the total NPV of all present and future investments. The ...
... projects with a positive net present value. • The growing annuity equation is useful for back-of-the-envelope valuations. 3 Chapter 1: Never Forget the Golden Rule: Pursue Strategies with Positive NPV Key Learning Points.
Contents
Discounted Cash Flow and Economic Profit Valuation | 111 |
Value Driver Forecasting | 255 |
Index | 363 |
EULA | 384 |