Intelligent Investor

Earning per share

Things to Consider About Per-Share Earnings Here we will begin with two pieces of advice to the investor that cannot avoid being contradictory in their implications. The first is: Don’t take a single year’s earnings seriously. The second is: If you do pay attention to short-term earnings, look out for traps in the per-share figures. […]

Dividend Record

Dividend Record and Current Dividend Rate One of the most persuasive tests of high quality is an uninterrupted record of dividend payments going back over many years. We think that a record of continuous dividend payments for the last 20 years or more is an important plus factor in the company’s quality rating. Indeed the […]

Financial Strength and Capital Structure

Stock of a company with a lot of surplus cash and nothing ahead of the common is clearly a better purchase (at the same price) than another one with the same per share earnings but large bank loans and senior securities. Such factors are properly and carefully taken into account by security analysts. The most […]

Management

It is fair to assume that an outstandingly successful company has unusually good management. This will have shown itself already in the past record; it will show up again in the estimates for the next five years, and once more in the previously discussed factor of long-term prospects. The quality and conduct of management. A […]

Long Term Prospects

General Long-Term Prospects No one really knows anything about what will happen in the distant future, but analysts and investors have strong views on the subject just the same. These views are reflected in the substantial differentials between the price/earnings ratios of individual companies and of industry groups. For example, at the end of 1963 […]

Industry Analysis

Because the general prospects of the enterprise carry major weight in the establishment of market prices, it is natural for the security analyst to devote a great deal of attention to the economic position of the industry and of the individual company in its industry. Studies of this kind can go into unlimited detail. They […]

Capitalization Rates for Growth Stocks

Most of the writing of security analysts on formal appraisals relates to the valuation of growth stocks. Our study of the various methods has led us to suggest a foreshortened and quite simple formula for the valuation of growth stocks, which is intended to produce figures fairly close to those resulting from the more refined […]

Capitalization Rate

Factors Affecting the Capitalization Rate Though average future earnings are supposed to be the chief determinant of value, the security analyst takes into account a number of other factors of a more or less definite nature. Most of these will enter into his capitalization rate, which can vary over a wide range, depending upon the […]

Earning Power Value

The now-standard procedure for estimating future earning power starts with: Average past data for physical volume, prices received, and operating margin. Future sales in dollars are then projected on the basis of assumptions as to the amount of change in volume and price level over the previous base. These estimates, in turn, are grounded first […]

Stock Analysis

Before diving deep into the Stock Analysis let us first understand role and job of a Stock Analyst. Common-Stock Analysis The ideal form of common-stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase. This valuation, in […]

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