Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
ofitscurrentmarket,butitmaybeabletogrowinspiteof this because the entire market is growing rapidly. 2.Existinggrowthrateandexces ...
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Note thatthesearesubjectivejudgments, anditis entirely possiblethatanotheranalystlookingatthesecompaniescould haveverydifferent ...
lookingatthemostlogicalsourcefortheseestimates,which is the company’s own past, but pinpoint some dangers associated with relyin ...
geometric mean takes into account the compounding that occurs from period to period. wheregt= Growth rate in yeart where Earning ...
Measuresofhistoricalgrowtharedistortedbythepresenceof negative earnings numbers. The percentage change in earnings on a year-by- ...
The arithmetic average growth rate is higher than the geometric average growth rate for all four items, but the differenceis lar ...
inthetwoperiodsandtheaveragecorrelationacrossthetwo periods was close to zero (0.02). Ifpastgrowthinearningsisnotareliableindica ...
smallerfirms thantheyarefortherestofthemarket.This wouldsuggestthatyoushouldbemorecautiousaboutusing past growth, especially in ...
difficult to maintain historical growth rates as the firms double or triple in size. Thetrue testfor a small firmlies in howwell ...
expectedtobeunbiasedaboutthecompany’sfuture prospectsand,byextension,theirownmanagement skills.Alltoooften,managementforecastsre ...
areexpecting its earningsgrowthto be over the nextfive years. Information Advantages Thereareanumberofreasonstobelievethatanalys ...
theUnitedStates,however, firms routinely convey private information to analysts following them. Modelsforforecastingearningstha ...
summarizes forecasts of earnings from more than 50 investmentfirms.Theymeasurethesquaredforecast errors bymonthoftheyearandcompu ...
basisforarguingthatanalystpredictionsofgrowthratesmust bebetterthanpredictionsusingmodelbasedontimeseriesor other historical dat ...
With both historical and analyst estimates, growth is an exogenousvariablethataffectsvaluebutisdivorcedfromthe operating details ...
where gt= Growth rate in net income NIt= Net income in yeart Giventhedefinitionofreturnonequity,thenetincomein yeart− 1 can be w ...
Chase),arealestateinvestmenttrust(REIT)(Vornado),anda telecommunications firm (Verizon). The following table summarizes the retu ...
Dividingthis numberby thenet income gives us a much broader measure of the equity reinvestment rate: Unliketheretentionratio,thi ...
Theplusesand minusesofthis approacharevisiblein the table.Theapproachmuchmoreaccuratelycapturesthetrue reinvestmentinthefirmbyfo ...
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