I’ve always done this formula to give an idea of what a stock may do in future provided the same performance from the company. The more I read I don’t find that anyone recommends doing it this way so I’m wondering if maybe I should ditch using it though it has worked out great...just thinking about it. This is it...
-
I first note the avg growth rates and metrics at each stage of accounting. Sales, earnings, cash flow.
-
I then calculate the avg metric value against the avg compounding growth rates.
-
Finally I discount the amount of shares increase/decrease avg over 5 yrs.
Of course I consider what this all reveals in the context of industry, startup vs established company, etc. But I found its a good way to get a range of what might happen.
Any critiques on going about it this way? Its kind of similar to the owners earnings projections that buffet used but not exactly.
Submitted February 26, 2021 at 09:50PM by G1G1G1G1G1G1G https://ift.tt/3aZXhlU
