#+title: Section 11 | Lesson 59 - read financials and find data patterns
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* Links
- [[./../mba-main.org][TOC | Business]]
- [[https://www.udemy.com/course/an-entire-mba-in-1-courseaward-winning-business-school-prof/learn/lecture/4315028#overview][S11:L59 course video]]

* Notes

- MS changed from a growth stock to a value stock
- growth investors loved it
- bill gates left and the company became a bureacracy
- dont ever invest in a tech company where the founder is gone
- they are buying back shares

** forecast revenue
- forecast each year after the next
  - not looking at each
- add assumptions 'why' something will happen
  - e.g. 2016 Windows 10 is free for the first year, but the second year cost
  - xbox sales slowing
    - good because factories are less profitable
  - the new director was good with clouds and clouds are good for $

*** how to build the model
- read the 10k
- go to investors website and read relations stuff
- last 15 minutes of conference wall street guys ask questions
- call investor relations directly and ask them
  - make sure you do your due dilligence
  - the relations guys will bs you if you don't know your stuff
- you have the same access as analysts do
  - reg fd: regulation federal disclosure
    - government mandatated
    - everyone has the same access
      - publish on website
      - publish on webcasts

** valuation
- create a forecast
  - got earnings per share
  - listed assumptions

*** how to make a target price
- 3 methodologies
- do all of them and take an average
- keep it simple

**** methodology 1:  price / earnings ratio
- target price should be based on estimates 5 years from now
  - more or less relevant
  - don't be a victim of group think
- estimate what is the percentage of growth in 5 years
- multiply the EPS (Earnings per share) by that number