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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... AMAZON'S 2013 ANNUAL REPORT UNDERSTANDING THE RELATIVE WEALTH CHART A COMMENT ON GOODWILL CHAPTER APPENDIX: GROSS PLANT RECAPTURED NOTES Section II: Discounted Cash Flow and Economic Profit Valuation 4 WHAT'S IT WORTH? VALUING THE FIRM ...
... Amazon increased the amount it spent on marketing and technology during this period. EXHIBIT 2.2 Amazon's return on equity (ROE) and price‐to‐book ratio (P/B). Market capitalization is based on the December yearend value. EXHIBIT 2.3 ...
... Amazon's 2013 CFROI. EXHIBIT 3.4 Amazon's reported gross property and equipment in 2013. EXHIBIT 3.5 Adjusted gross plant for Amazon in 2013. EXHIBIT 3.6 Asset de‐layering example. EXHIBIT 3.7 Estimated capital expenditure and the ...
... Amazon's inflation‐adjusted gross plant in 2013. EXHIBIT 3.10 Asset type as a percentage of total inflation‐adjusted ... Amazon's capitalized operating leases in 2013. EXHIBIT 3.13 Capitalized R&D calculation. EXHIBIT 3.14 Amazon's ...
... Amazon's gross cash flow in 2013. EXHIBIT 3.30 Amazon's gross cash flow in 2013 based on a top‐down approach. EXHIBIT 3.31 Amazon's CFROI inputs and calculation. EXHIBIT 3.32 Amazon's Relative Wealth Chart as of April 30, 2014 ...
Contents
PURSUE | |
WHATS IT WORTH? VALUING THE FIRM | |
A REVIEW OF CONVENTIONAL VALUATION | |
MODEL | |
THE FLYING TRAPEZE OF PERFORMANCE | |
HOLT ECONOMIC PROFIT | |
GEOMETRIC AVERAGE? | |
THE COMPETITIVE LIFECYCLE | |
THE PERSISTENCE OF CORPORATE | |
FORECASTING GROWTH | |
RISK REWARD AND THE HOLT DISCOUNT | |
NOTES | |
CLOSING THOUGHTS | |