The Excel stock analyzer now has two spreadsheets based on Warren Buffett's approach to stock valuation.
The valuation sheets have been built from the ground up based on this article: Valuing Stocks the Warren Buffett Way
The article mentions that more details can be found at:
"Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World’s Most Famous Investor" (I have not read the book)
Please do not use this sheet unless you understand the above article. Since I have nothing new to add, I see little point in describing the valuation sheets. So let me limit myself to the following:
Some questions for the investor to ask:
- What is the earnings yield? How does it compare with long-term govt. bond yield?
- How do returns projected with historical earnings growth fare?
- What is the sustainable growth rate of the company, based on ROE and dividend payout ratio?
- What is the return on investment based on book value growth rate and for different PE values?
The sheets provide different ways of answering these questions by suitable choice of inputs. Historical stock price from Yahoo finance (auto-downloader included in the analyzer) are necessary to use valuation sheets 2 and 3.
I hope the version 2.0 of the Excel Stock analyzer will help the user answer these questions. Please use the sheet only after reading the sources listed in the sheet, understanding and verifying the formulae used in the sheet and when you are comfortable with them.
Here is a screenshot (click on it to enlarge)
Subscribe to get posts via email
|You Can Be Rich Too With Goal-based Investing A book that can help you ask the right questions about money and find simple solutions. Comes with nine online calculator modules. Read more about the book and order now!|
GameChanger - Forget Startups, Join Corporate & Still Live The Rich Live You want Take that international trip at 50% lower costs! Optimise credit card usage! Set money management on auto-pilot! Read more about the book and order now!