Friday, July 30, 2010
Normalized Earnings per Share ($)
An estimate of a company's current earnings power under average economic circumstances. It is calculated using a time series regression of historical and consensus forecasted earnings per share. If negative or less than $0.01, then we use $0.01 as a minimum.
Estimated 5 Year Annual Growth (%)
The estimated compound annual growth rate in earnings per share over 5 years. The first approximation is based on consensus analyst estimates and the company's internal growth rate based on ROE and payout ratio.
Estimated Required Return (%)
The rate an investor requires in order to be compensated for the time value of money, business risk and financial leverage. It is based on market capitalization and cash flow volatility risk related to the respective sectors.
Current Adjusted P/E
Market estimate of the excess earnings power of the company over and above the required return on book value. Formula:
(Market Price - Tangible Book Value per Share) / Normalized Earnings per Share.
Terminal Adjusted P/E Year 5
The assumed excess earnings multiple for the company at the end of five years. Formula:
(Current Adjusted P/E + 10) / 2 [The maximum limit is 30.]
Estimated Earnings per Share Yr 5 ($)
Based on normalized earnings per share and estimated 5 year annual growth rate.
Estimated Dividend per Share Yr 5 ($)
Based on current dividend per share and estimated 5 year annual growth rate (payout ratio assumed to be constant).
Estimated Tangible Book Value per Share Yr 5 ($)
The estimated tangible book value per share in year 5 based on current tangible book value and estimated retained earnings over 5 years.
Model Value ($)
An estimate of the intrinsic value using this valuator.
5-Year Price Target ($)
Projected stock price in five years based on the Year 0 normalized earnings, expected growth in earnings, adjusted terminal P/E and estimated tangible book value per share in year 5.
Expected 5 Yr Rate of Return (%)
Expected annual rate of return based on the 5-year price target and dividends.

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