1.9 KiB
1.9 KiB
Section 11 | Lesson 59 - read financials and find data patterns
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
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forecast each year after the next
- not looking at each
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add assumptions 'why' something will happen
- e.g. 2016 Windows 10 is free for the first year, but the second year cost
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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
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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
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you have the same access as analysts do
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reg fd: regulation federal disclosure
- government mandatated
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everyone has the same access
- publish on website
- publish on webcasts
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valuation
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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
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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