The best way to value an underlying business is to look at its trailing Earnings per share (EPS). This tells you how much a company is paying out to shareholders every quarter. This is one way to determine if you are really getting your money worth by buying into the stock.
Next, look at its EPS consistency, A company can have a sudden increase or sudden decrease in its EPS due to operational shifts or economic situations. Is the company growing its EPS quarter by quarter? How much is it growing consistently?
We often like to compare EPS among other EPS within the same industry. Eg: Disney vs comcast, Fedex vs UPS, Google vs Meta etc. This gives you an idea on how well a company is doing compared to its close competitors. You can use AI to find out a company’s closest competitors.
In our Stock Cheatsheet, we organize our stocks according to different industry. This gives us deeper insights and comparisons among stocks within the same industry. See how to read our cheatsheet.
In our stock cheatsheet, we adopt a cautious approach when evaluating the CAGR, which leads to a more conservative estimate of intrinsic value. This ensures our pricing remains realistic and, most importantly, *safe* for our investors.
*Safe* can be interpreted differently depending on each investor’s individual risk profile. While we aim to offer conservative estimates, it is important to note that all investments carry inherent risks, and past performance is not necessarily indicative of future results. We encourage investors to conduct their own due diligence and consider their personal financial goals and risk tolerance before making any investment decisions.”