Comments on: Bruce GreenWald’s Earnings Power Value EPV Lecture Slides

By: Insmed Q3 Net Net Stock Analysis and Valuation | Old School Value

Insmed Q3 Net Net Stock Analysis and Valuation | Old School Value — Mon, 09 Nov 2009 10:18:10 +0000

[...] a quick earnings power value, the value comes out to [...]

By: Earnings Power Value EPV Valuation Microsoft | Old School Value

Earnings Power Value EPV Valuation Microsoft | Old School Value — Mon, 21 Sep 2009 15:00:32 +0000

[...] It means that the $19.73 difference is the competitive advantage enjoyed by Microsoft. Refer to slide 18 of Greenwald’s EPV lecture slide. [...]

By: Bruce Greenwald Earnings Power Value EPV | Old School Value

Bruce Greenwald Earnings Power Value EPV | Old School Value — Mon, 07 Sep 2009 03:44:40 +0000

[...] a good idea would be to go through the book with Bruce Greenwald’s EPV lecture notes on the topic. The diagrams and point form will help out in the understanding. Share and [...]

By: Jae Jun

Jae Jun — Thu, 27 Aug 2009 19:19:44 +0000

Yep. I just finished going over the book a second time but there are some substantial differences. Greenwald doesn’t like to use DCF because of the assumptions and projections required.

However, I ultimately see the intrinsic value of the business going up when the company is able to generate FCF. A company could have the highest sustainable earnings but could result in nothing if it never drops to the bottom line.

This is the biggest problem I have with using the EPV. Enron had high sustainable earnings but had people looked to see whether that number turned into FCF, it would have been a completely different story.

I’m still thinking hard about how I will implement this.

By: The Curious Investor

The Curious Investor — Thu, 27 Aug 2009 14:02:48 +0000

Not to split hairs, but I believe that Bruce Greenwald (in his book Value Investing: From Graham to Buffett and Beyond) actually describes his analysis as completely discounting any growth. That is, as a value investor, he’s unwilling to pay any premium for growth. EPV valuation simply assumes standardized earnings – “average” margins over “sustainable earnings” – multiplied by 1/WACC determines the Company’s current value. You’ll notice it’s very similar to a standard DCF analysis if you remove the growth rate and assume WACC as the discount rate. Just substitute “sustainable earnings” for “sustainable cash flow.”
The Curious Investor´s last blog ..Cash Conversion Cycle Case Studies

By: Jae Jun

Jae Jun — Tue, 09 Jun 2009 23:20:35 +0000

Thanks for answering Anon.

By: ANON

ANON — Tue, 09 Jun 2009 21:55:24 +0000

A = Amortization

By: Carl

Carl — Tue, 09 Jun 2009 19:58:13 +0000

I have a question on one of the equation on slide #7, Maint. Inv = Depr + A, What is A ?

By: Jae Jun

Jae Jun — Thu, 04 Jun 2009 01:00:33 +0000

Ryan, is the email address you entered correct? ryan2041 (at) mail.com ?? The email is bouncing.

By: Ryan

Ryan — Wed, 03 Jun 2009 23:38:27 +0000

Hi Jae,

I just found your website from other sties. This looks great. Very useful info and resources.
By the way can you explain in details the difference b/w $15.95 spreadsheets and $21.95 spreadsheets? What financial statements are included?

Thanks
Ryan