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2:48 am
February 10, 2010
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Jae Jun
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Yes BOLT, GRVY are cyclical. Non cyclical companies would be something like JNJ, Kroger, Safeway, P&G, KO etc
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11:22 pm
February 9, 2010
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zehua
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Jae Jun said:
EPV is a snapshot of the company and to perform the EPV you have to get the normalized income which will erase many one time cycles.
With DCF and Graham, you need at least 5 years of historical data in order to get a sense of the company. You simply cant run a DCF based on last year numbers alone.
Anything that relies on the economy, commodities and unnecessary goods are cyclical. e.g. you don't need to buy a handbag every day of your life. Whereas you need to eat, drink, take medicine, visit the doctor, stay educated etc.
Thank you Jae. To my understanding, BOLT is cyclical because it replies on oil price which is a commodity. What about GA or GRVY? They are both online game companies. Can I say that they rely on economy? Because if economy goes bad, people become poor and will be unwilling to pay for the items in the games. They will only play for free.
I really cannot think of any company that does not rely on the economy?
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1:57 am
February 9, 2010
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Jae Jun
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Taking a look at GA,
Income has steadily gone up but it dramatically so you could use a low, mid and high estimate.
Low estimate could be $140 for the adjusted income
Mid could be $180 and high estimate could be $250
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10:15 pm
February 8, 2010
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zehua
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| Member | posts 96 |
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Jae Jun said:
EPV is a snapshot of the company and to perform the EPV you have to get the normalized income which will erase many one time cycles.
With DCF and Graham, you need at least 5 years of historical data in order to get a sense of the company. You simply cant run a DCF based on last year numbers alone.
Anything that relies on the economy, commodities and unnecessary goods are cyclical. e.g. you don't need to buy a handbag every day of your life. Whereas you need to eat, drink, take medicine, visit the doctor, stay educated etc.
Thank you Jae.
For EPV, if a company such as GA only has three years history, then it certainly doesn't have many one time cycles, as the history is short. Then how do I know what is the most accurate normailzed income shall I input into the spreadsheet?
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11:20 pm
February 7, 2010
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Jae Jun
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| posts 1333 |
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EPV is a snapshot of the company and to perform the EPV you have to get the normalized income which will erase many one time cycles.
With DCF and Graham, you need at least 5 years of historical data in order to get a sense of the company. You simply cant run a DCF based on last year numbers alone.
Anything that relies on the economy, commodities and unnecessary goods are cyclical. e.g. you don't need to buy a handbag every day of your life. Whereas you need to eat, drink, take medicine, visit the doctor, stay educated etc.
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9:35 pm
February 7, 2010
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zehua
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Hi Jae,
You mentioned in a previous post that EPV can correctly evalute cyclicals, growth companies and young companies, while Graham and DCF methods cannot. Could you please tell me why? Moreover, how do we know if a company is cyclical or not, such as BOLT and ESV?
Thanks,
Zehua
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