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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... portfolio. EXHIBIT 7.3 The worldwide geometric and arithmetic premiums relative to bonds since 1900. Dimson, Marsh, and Staunton. EXHIBIT 7.4 The HOLT Pricing Puzzle. Solving for the discount rate that equates future free cash flows to ...
... & USA Industrial / Service Firms, $250 million minimum market cap 1950–2015. EXHIBIT 9.2 Median CFROI of High and Low CFROI portfolios over time. EXHIBIT 9.3 Transition Probability % Global Industrial/Service Firms, 1985–2013 EXHIBIT.
... no hesitation in recommending this book to anyone interested in investment or corporate finance.” Tom Mann, Senior Portfolio Manager, Schroder Investment Management “Using a time tested, total systems, CFROI approach to valuation,
... Portfolio Manager, Swedbank Robur Asset Management “In our age of alternative truths in politics as well as finance, HOLT has proven to be one of very few truthful voices in analyzing corporate performance.” Henrik Andersson, Fund ...
... portfolio managers is to select future winners and avoid tomorrow's losers. This requires a considerable measure of predictive skill (or luck). Like a garden, forecasting skill can be cultivated to yield greater output. We provide ...
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 | |