Six Numbers every Investors Must Know

Transcript

1. Six Numbers Every Investors Must Know Puah Soon Lim,CFA
2. Disclaimers This workshop is for educational purpose ONLY
3. CAGR P/B ROE PE EY PEG
5. Compound Annual Growth Rate What is a CAGR?
6. Example $10,000 1 Jan 2010 1 Jan 2011 $13,000 1 Jan 2012 $9,500 1 Jan 2013 $14,000 CAGR = 11.87%
7. Doesn't consider dividend payment Doesn’t consider volatility Return are “smooth” Limitation of CAGR 6
8. Application
9. BERKSHIRE HATHAWAY 2009 ANNUAL REPORT Returns of Berkshire Hathaway Application – Evaluating Investment Proposal and Claims
10. COMPOUNDED RETURNS & LIMITS AS PRACTICED BY FAMOUS INVESTORS PETER LYNCH – 29% compounded for 13 years WARREN BUFFET – 20.3% compounded for 45 years SIEGEL – 6.7% over 204 years S&P500 – 9.3% compounded for since 1965 U.S. 10-YR BONDS – 3.0% Application – Evaluating Investment Proposal and Claims
11. Application - Valuation For illustration Only Source: EquitiesTracker.com
12. For illustration Only Application - Valuation Source: EquitiesTracker.com
13. For illustration Only Application - Valuation Source: Bloomberg, Cap IQ, Reuters
14. Graphical CAGR Representation Source: Bloomberg, Cap IQ, Reuters
15. 0 1000 2000 3000 4000 2009 2010 2011 2012 Sales Net Income Market Cap Source: Bloomberg, Cap IQ, Reuters
16. Price to Book Ratio
17. Dairy Farm International Dairy Farm International
18. Source: Bloomberg, Cap IQ, Reuters
19. Source: Bloomberg, Cap IQ, Reuters
20. Price to Book Ratio
21. P/B ROE ROA Net Margin Total Asset Turnover Equity Multiplier P/E EY PEG
22. Price Earnings
23. Price Per Share ÷ Earning Per Share
24. Market Capitalisation ÷ Net Income
25. Current
26. Trailing (TTM) 12 months
27. Forward 12 months
28. Buy or Sell? 3 5 7 9 11 13 15 17 19 21 PE Ratios Buy? Sell?
29. Source: Bloomberg, Cap IQ, Reuters
30. Earnings Yield
31. P/E EY 1 100% 5 20% 10 10% 15 6.7% 20 5% 30 3.3% 40 2.5% 50 2% 100 1%
32. Earnings yield Bond Vs Growth Stock Bonds Stock Coupon/Earnings yield 5% 5% Investment $100 $100 Year 1 Return $5 $5 Earnings growth 0% 0% Year 10 Return $5 $5 Earnings yield – Year 1 5% 5% Earnings yield – Year 10 5% 5% Implied Stock Price $100 $100
33. Earnings yield Bond Vs Growth Stock Bonds Stock Coupon/Earnings yield 5% 5% Investment $100 $100 Year 1 Return $5 $5 Earnings growth 0% 10% Year 10 Return $5 $12.97 Earnings yield – Year 1 5% 5% Earnings yield – Year 10 5% 12.97% Implied Stock Price $100 $259
34. The PEG Ratio (Price/Earnings) ÷ Growth
35. Earnings Growth, Earnings Yield and PEG Stock 1 Stock 2 Stock 3 Stock 4 Stock 5 Coupon/ EY 5% 5% 5% 5% 5% Investment $100 $100 $100 $100 $100 Year 1 Return $5 $5 $5 $5 $5 Earnings Growth 0% 5% 10% 15% 20% Year 10 Return $5 $8.14 $12.97 $20.23 $30.96 EY(Year 1) 5% 5% 5% 5% 5% EY(Year 10) 5% 8.1% 13% 20.2% 31% Year 1 P/E NA 20 20 20 20 Year 1 PEG NA 4 2 1.3 1
36. Interpretatio n Great Good Marginal Avoid PEG 0 - 1 1 - 2 2 - 3 >3 Source: Bloomberg, Cap IQ, Reuters
37. Stock Current PE Trailing PE Forward PE PEG Facebook 2619.25 133.35 52.55 81.85 Google 34.87 30.12 22.55 2.03 Apple 13.52 13.52 12.81 0.82 Microsoft 14.28 13.79 14.01 1.82 Source: Bloomberg, Cap IQ, Reuters
38. Stock Current PE Trailing PE Forward PE PEG DBS 10.63 10.64 11.68 1.69 UOB 11.56 11.35 12.28 1.42 OCBC 8.49 12.82 13.03 1.42 Source: Bloomberg, Cap IQ, Reuters
39. Stock Current PE Trailing PE Forward PE PEG Dairy Farm 28.53 29.44 24.55 2.57 Nestle 29.47 28.29 27.53 4.33 ST Engineering 20.67 21.63 20.39 3.19 Source: Bloomberg, Cap IQ, Reuters
40. Growth At A Reasonable Price (GAARP) Reuters.com/Money/Stock Screeners/QuickScreens
42. Net Income ROE = Equity Sales Sales X Net Income Sales X Sales Equity X Total Assets Total Assets Decomposing The ROE Net Income Sales X Sales Equity Total Assets Total Assets X
43. ROE Net Margin Asset Turnover Leverage × ×
44. Source: Bloomberg, Cap IQ, Reuters
45. Sales/Total Assets (X) Source: Bloomberg, Cap IQ, Reuters
46. Source: Bloomberg, Cap IQ, Reuters
47. Source: Bloomberg, Cap IQ, Reuters
48. Source: Bloomberg, Cap IQ, Reuters
49. Source: Bloomberg, Cap IQ, Reuters
50. Source: Bloomberg, Cap IQ, Reuters
51. company symbol Price to Book (P/B) Price to Earnings (P/E) ROE Net Margin Sales / Assets Assets/Book Dairy Farm International Holdings Limited D01-SG 11.3 30.6 36.7 4.3 2.6 3.3 Carrefour SA CA-FR 2.5 8.5 5.6 0.5 2 5.6 Kroger Co. KR-US 4.5 14.8 32.4 1.6 4 5.1 Whole Foods Market, Inc. WFM-US 5.1 36.4 14.4 4.2 2.4 1.4 Royal Ahold NV AH-NL 2 16.7 10.9 2.2 2.1 2.4 Casino Guichard-Perrachon SA CO-FR 1.3 6.1 20.6 3.4 1.1 5.5 METRO AG MEO-DE 1.6 18.5 9 0.7 2.2 5.8 Jeronimo Martins, SGPS S.A. JMT-PT 5.7 19.9 30.4 3.2 2.4 4.0 Safeway Inc. SWY-US 1.5 2.7 5.2 0.6 2.3 3.8 Wm Morrison Supermarkets plc MRW-GB 0.9 8.5 11.2 3.2 1.7 2.1 Delhaize Group SA DELB-BE 1 N/A -1.3 -0.3 1.9 2.3 Sheng Siong Group Ltd. OV8-SG 5.9 22 26.2 5.5 3 1.6 Tesco PLC TSCO-GB 1.5 N/A 7.6 1.9 1.3 3.1 Big C Supercenter Public Co., Ltd. BIGC-TH 4.1 21.7 20.3 5.5 1.3 2.8
52. Company Symbol Price to Book (P/B) Price to Earning s (P/E) ROE Net Margin Sales / Assets Assets/ Book Dairy Farm International Holdings Limited D01-SG 11.3 30.6 36.7 4.3 2.6 3.3 Carrefour SA CA-FR 2.5 8.5 5.6 0.5 2 5.6 Kroger Co. KR-US 4.5 14.8 32.4 1.6 4 5.1 Whole Foods Market, Inc. WFM-US 5.1 36.4 14.4 4.2 2.4 1.4 Royal Ahold NV AH-NL 2 16.7 10.9 2.2 2.1 2.4 Casino Guichard-Perrachon SA CO-FR 1.3 6.1 20.6 3.4 1.1 5.5 METRO AG MEO-DE 1.6 18.5 9 0.7 2.2 5.8 Jeronimo Martins, SGPS S.A. JMT-PT 5.7 19.9 30.4 3.2 2.4 4.0 Safeway Inc. SWY-US 1.5 2.7 5.2 0.6 2.3 3.8 Wm Morrison Supermarkets plc MRW-GB 0.9 8.5 11.2 3.2 1.7 2.1 Delhaize Group SA DELB-BE 1 N/A -1.3 -0.3 1.9 2.3 Sheng Siong Group Ltd. OV8-SG 5.9 22 26.2 5.5 3 1.6 Tesco PLC TSCO-GB 1.5 N/A 7.6 1.9 1.3 3.1 Big C Supercenter Public Co., Ltd. BIGC-TH 4.1 21.7 20.3 5.5 1.3 2.8
53. Company Symbol Price to Book (P/B) Price to Earnings (P/E) ROE ROA Assets/ Book DBS Group Holdings Ltd D05-SG 1.1 10.8 11.2 1 11.2 Sumitomo Mitsui Financial Group, Inc. 8316 0.8 6.2 13.3 0.6 22.2 Standard Chartered PLC STAN-GB 1 11 9.1 0.7 13.0 Deutsche Bank AG DBK-DE 0.6 N/A -0.9 0 NA Citigroup Inc. C-US 0.7 11 6.7 0.7 9.6 Bank of China Ltd. Class H 3988 0.8 4.6 17.5 1.1 15.9 Oversea-Chinese Banking Corporation Limited O39-SG 1.4 12 11.5 0.9 12.8 United Oversea Bank U11-SG 1.3 6.4 12.1 1.1 11.0