Every generation of investors believes it has discovered something new. A revolutionary technology, a once in a lifetime company, a business model so brilliant that the old rules of valuation no longer apply. And every generation, with remarkable consistency, learns that the old rules were never really old. They were just temporarily ignored. The PEG […]
Is Your Favorite Stock a Bubble? Let the PEG Ratio Decide Read More »
There is a strange ritual that happens in finance every single day. A young analyst opens Excel, builds a discounted cash flow model with twelve tabs and three hundred assumptions, and produces a number that looks suspiciously like the price the company is already trading at. Their managing director nods. The client nods. Everyone agrees
Mastering the DCF: How to Build a Valuation Model That Isn’t Garbage Read More »
Somewhere in a glass tower, a chief financial officer is staring at a spending decision. The money will leave the company either way. The work will get done either way. But where that spending lands on the financial statements is a choice, and that choice can transform an ugly quarter into a celebrated one. It
CapEx vs. OpEx: The Accounting Shell Game Management Hopes You Do Not Notice Read More »
Most investors treat the Weighted Average Cost of Capital the way medieval peasants treated Latin liturgy. They nod respectfully, repeat the words, and assume someone smarter understands what is actually happening. WACC gets plugged into discounted cash flow models, spat back as a percentage, and filed away as the discount rate. Job done. Move on
Beyond the Formula: How to Use WACC to Judge Management Quality Read More »
There is a particular kind of madness that takes hold in boardrooms and earnings calls every quarter. It sounds like this: “Our strategy is to grow revenue by 20% year over year.” Everyone nods. The slide advances. Nobody asks the obvious question. What if revenue growth is not something you do, but something that happens
Revenue Growth Is Not a Strategy (It’s a Consequence) Read More »
There is a story Wall Street loves to tell itself. It goes something like this: the best companies own nothing, control everything, and let someone else deal with the messy, expensive, physical reality of actually making things. Asset light is the aspiration. Capital efficiency is the religion. And the return on invested capital of a
The Asset Light Trap: Why “Lean” Companies Can be the Most Fragile Read More »
The same metric. The same formula. Enterprise value divided by revenue. Simple enough that a first year analyst can calculate it, dangerous enough that it has destroyed billions in capital when applied without thinking. EV/Revenue is one of the most popular valuation shortcuts in finance. It tells you how much the market is willing to
Tech vs. Energy: Why EV/Revenue Is Brilliant for One and Fatal for the Other Read More »
Every company loves to announce big spending. New factories, new technology platforms, new distribution centers. The press releases practically write themselves. “We are investing in our future,” the CEO declares, standing in front of a rendering that looks suspiciously like every other corporate rendering you have ever seen. But here is the question that almost
The ROIC Engine: How to Tell if New Spending is Actually Creating Value Read More »
Most investors treat a low Price to Free Cash Flow ratio the way a shopper treats a clearance rack. Something is cheap, so it must be a deal. The logic feels airtight. You are paying less for every dollar of cash the business generates. What could go wrong? Quite a lot, actually. The P/FCF ratio
There is a particular thrill that comes with finding a stock trading at 8 times earnings. It feels like walking into a luxury store and discovering a mispriced jacket on the clearance rack. Your pulse quickens. Your internal monologue starts whispering things like “the market is sleeping on this one” and “this is a steal.”
Why Your Brain Wants the P/E, but Your Wallet Needs the P/FCF Read More »