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 THE FUNDAMENTAL PRICING MODEL THE VALUE DRIVER TREE INVESTMENT GROWTH IS A VALUE DRIVER APPLYING THE FUNDAMENTAL PRICING MODEL FINAL THOUGHTS FOR THE MOMENT CHAPTER APPENDIX NOTES 6 HOLT ECONOMIC PROFIT KEY LEARNING POINTS ...
... Value Driver Forecasting 8 THE COMPETITIVE LIFE‐CYCLE OF CORPORATE EVOLUTION KEY LEARNING POINTS INTRODUCTION WHAT IS FADE? THE COMPETITIVE LIFE‐CYCLE QUESTION MARKS (EARLY LIFE‐CYCLE) ESSENTIAL FACTS ABOUT THE COMPETITIVE LIFE‐CYCLE ...
... driver. EXHIBITI.2 Perspectives for application of the Fundamental Pricing Model. EXHIBIT I.3 The Pricing Puzzle ... Value of Assets equals Market Value of Total Liabilities plus Market Value of Shareholders' Equity. The latter is better ...
... drivers comparable over time and across borders. EXHIBIT 5.8 Profitability drivers ... value creation is easier to track and discuss using the EP method. The key ... driver tree showing the key variables in our Fundamental Pricing Model ...
... value driver performance from 2003 to 2013. EXHIBIT 6.13 Danaher's EROI and transaction EROI from 2003 to 2013. EXHIBIT 6.14 Danaher's economic profit from 2003 to 2013. EXHIBIT 6.15 Danaher's economic profit from operations and after ...
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 | |