Michael Mauboussin: "The value of a business is the present value of the future free cash flow, and the accounting for book value has little bearing on that."
google.com/amp/s/www.fool…
google.com/amp/s/www.fool…
"...multiples may vary for justifiable economic reasons. For instance, two companies with the same growth rate in earnings but with different
returns on invested capital will justifiably trade at dissimilar P/E, EV/EBITDA, and P/B multiples." bluemountaincapital.com/wp-content/upl…
returns on invested capital will justifiably trade at dissimilar P/E, EV/EBITDA, and P/B multiples." bluemountaincapital.com/wp-content/upl…
"...it takes ten or more years of cash flows to justify current stock prices. Nonetheless, most investors avoid the difficulty of forecasting long-term cash flows by simply ignoring them. Instead, they focus on short- term earnings growth prospects." expectationsinvesting.com/pdf/earnings.p…
Investors can obtain an investing edge by overcoming "I'm too lazy to get past looking up ratios on Yahoo Finance bias." Investing based on free cash flow does require actual work though, so it will never be very popular. That arbitrage is a good thing for a rational investor.
"Equity investors are business buyers. While most shareholders own only a small fraction of a company, they are owners nonetheless." www3.nd.edu/~scorwin/fin70…
If you like to read and learn more about investing and have not read this material, what the heck have you been reading? google.com/amp/s/hurrican…
