Buffetology-Eps Growth (Guru Screens)

What can you expect from this article?

1. A brief about the book itself- Buffetology.
2. Significance of the EPS and P/E ratios.
3. Rationale behind combing both of these ratios.
4. How to find value stocks with EPS growth?
5. Do it the marketXLS way.

Buffetology

Mr. Warren Buffett is the most renowned investor of all time. I doubt there is any finance enthusiast on this planet who has not heard about him or his investing style. His former daughter-in-law, Mary Buffett, wrote a book named “Buffettology,” She thoroughly discussed Buffet’s various investing styles’ basic tenets. EPS Growth is one of the parameters that Mr. Buffett likes to look at while picking stocks.

EPS

EPS stands for earning per share, which means how much a shareholder will make per share if the company decides to distribute all its earnings. EPS indicates a company’s profitability. More the ratio more is the company’s earnings and hence better the financial health of the company. It can be used to compare a company with its peers.

P/E ratio

P/E stands for the price to earnings ratio, which tells the price investors are willing to pay for each dollar in earnings. The primary aspect of this ratio is to find the valuation of a company. In layman’s terms, to find if a company is overpriced or under-priced. When used alone, PE ratio can be misleading. However, a high PE often suggests that a stock is overvalued and vice versa.

How to use it?

The main idea is to value a company based on its past earnings. That being said, PE alone can be misleading while predicting the future price of a stock. Therefore, it makes sense to combine it with a growth parameter, which is the EPS. Let’s see how Mr. Buffett does it.

In this method, Buffett analyses the company’s long-term growth trend to determine how it may perform in the next 10 years. He takes a combination of two metrics – EPS and P/E.

Firstly, He shortlists the stocks whose average earnings growth rate has been more than 15% over the past 5 to 10 years. Then, He takes the EPS growth of the last ten years and projects the next ten years’ growth. Similarly, He determines the average P/E ratio of the last 10 years and multiplies it with the next 10th year EPS to determine the stock price. Finally, He determines the return rate on the stock, taking the current price as entry and estimated price as an exit. If the estimated return rate comes out to be greater than 15%, he only shortlists that stock for investment.

Let’s understand this using an example:

Let’s suppose any company’s EPS is $4.62 and has been growing at an average rate of 17.6% per year. As per the forecast, it will be $23.37 in 10 years from here.
The average growth rate of the Price to Earnings ratio has been 17.7.
Estimated stock price = 23.37 * 17.7 = $413.65
If the stock price right now is $75, the rate of return will be 18.62% annually, which is greater than 15% and fits perfectly with Warren Buffett’s strategy.
We have not considered the dividend yield of a company in this, so even if the company gives 1.5% of the dividend, the overall return rate will be 20%. (18.62 + 1.5%)

Pick stocks using MS excel

Below is an MS excel template that our website provides for the valuation of a company based on EPS growth. You just enter the ticker symbol of the stock you are interested in and the template gives you the future stock price and the growth rate y-o-y. I took MSFT as an example. The current stock price is $237.1 and if everything goes fine the price will increase to about $710 by 2030. However, the growth rate of 12% doesn’t conform to the cut-off set by Buffet, which is 15%. Mr.Buffet will surely not consider this investment but 12% is not that bad either.

Disclaimer

None of the content published on marketxls.com constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person.

The author is not offering any professional advice of any kind. The reader should consult a professional financial advisor to determine their suitability for any strategies discussed herein.

the article is written for helping users collect the required information from various sources deemed to be an authority in their content. The trademarks if any are the property of their owners and no representations are made.

References

Learn more about Guru screens here.

Verelq News |
28.03.2024

شرط بندی پرسپولیس شرط بندی استقلال شرط بندی روی تراکتورسازی تبریز شرط بندی روی سپاهان شرط بندی رئال مادرید بارسلونا شرط بندی شرط بندی psg سایت شرط بندی جام جهانی شرط بندی جام جهانی 2026 سایت شرط بندی جام جهانی 2026 بازی انفجار رایگان سایت انفجار ضریب بالا بهترین سایت شرط بندی فارسی شرط بندی بدون فیلتر شرط بندی بازی رولت شرط بندی پوکر شرط بندی مونتی شرط بندی سنگ کاغذ قیچی شرط بندی بلک جک کرش رویال بت پاسور شرط شرط بندی تخته نرد آنلاین انفجار 2 بت شرط بندی بازی اسلات شرط بندی بازی پوپ سایت سامان بت ریور پوکر 2024 سایت 4030bet ورود به بازی انفجار دنس بت شرط بندی انفجار دنس آموزش بازی پوکر سایت شرط بندی 123 بهترین شرط بندی بهترین سایت شرط بندی انفجار اپلیکیشن بازی انفجار دانلود بازی انفجار انفجار بازی ربات بازی انفجار کازینو آنلاین ایرانی انفجار پولساز ورود به بازی انفجار بازی انفجار با شارژ 10 تومن سایت bet betyek وان ایکس برو آدرس سایت بت یک سایت دوست دختر اونلی فنز فارسی پیدا کردن دوست دختر ورود به ریور پوکر پدرام مختاری پویان مختاری نازنین همدانی مونتیگو داوود هزینه بیوگرافی آیسان اسلامی بیوگرافی دنیا جهانبخت سایت رسمی حسین تهی بیوگرافی کوروش وانتونز سایت آرتا وانتونز رها وانتونز بیوگرافی ربکا قادری سحر قریشی بیوگرافی تتلو بیوگرافی مهدی طارمی الناز شاکردوست سایت عادل فردوسی پور بیوگرافی نیلی افشار بیوگرافی محمدرضا گلزار سایت armin2afm بیوگرافی شادمهر عقیلی بیوگرافی سردارآزمون بیوگرافی علیرضا بیرانوند بیوگرافی رامین رضاییان وریا غفوری بیوگرافی علی دایی بیوگرافی پوریا پوتک مدگل سایت حصین بیوگرافی صدف طاهریان فرشاد سایلنت بیوگرافی آریا کئوکسر بیوگرافی sogang بیوگرافی میا پلیز بیوگرافی مهراد هیدن سایت رسمی سهراب ام جی بیوگرافی علیرضا جی جی بیوگرافی بهزاد لیتو اشکان فدایی بیوگرافی رضا پیشرو بیوگرافی گلشیفته بیوگرافی هیپ هاپولوژیست بیوگرافی سارن بیوگرافی آدام مرادی بیوگرافی محمد هلاکویی بیوگرافی علی حسنی سایت رسمی علی حسنی بیوگرافی ساسی خواننده بیوگرافی ابی باربد معصومی حسینی فایننس بیوگرافی امیرحسین نام آور بیوگرافی امین فردین بیوگرافی فرزاد وجیهی سایت سیب بت سایت jetbet آدرس جدید بت فوروارد وان ایکس بت سایت abt90 بازی انفجار سایت شرط بندی فاز بت بهترین سایت شرط بندی انفجار ورود به آلپاری آلپاری فارکس آدرس بروکر آلپاری بدون فیلتر ثبت نام در بروکر آلپاری فارسی صرافی کوکوین ربات فارکس بهترین سایت تتر

bandar alexistogel

alexistogel toto online

alexistogel livedraw hongkong

login alexistogel

alexistogel agen slot

Alexistogel Toto Macau

alexistogel

alexistogel macau

Alexistogel macau

alexistogel terpercaya

bandar togel hongkong

alexistogel slot online

Togel Hongkong

toto macau online

bandar toto macau

alexis togel macau

alexistogel slot

alexistogel gacor

alexistogel online

slot alexistogel

alexistogel slot

link alexistogel

bandar alexistogel

alexistogel link

alexistogel online

situs alexistogel

alexistogel toto

alexistogel casino

slot alexistogel

alexistogel bandar togel

link alternatif alexistogel

alexistogel bandar slot

alexistogel login

rtp alexistogel

alexistogel toto macau

alexistogel slot

alexistogel online

alexistogel daftar

alexistogel slot

alexistogel link alternatif

alexistogel bandar gacor

alexistogel terpercaya

Alexistogel Login

alexistogel

alexistogel slot dana

alexistogel bandar togel

alexistogel situs

alexistogel rtp

alexistogel slot

alexistogel daftar

alexistogel

alexistogel slot

alexistogel

alexistogel

alexistogel gacor

link alternatif alexistogel

alexistogel

alexistogel slot

alexistogel

alexistogel

Slot Online Alexistogel

link alternatif alexistogel

Alexistogel Login

slot online gacor

Hoki88 Slot Online

slot online gacor

slot online

slot online dana

slot gampang menang

slot88 online

bandar togel macau

bandar toto macau

togel sydney

Agen Slot Gacor

RTP Slot Online

slot online

Slot Online Gacor

slot gacor pg soft

situs slot online

bandar slot gacor

slot online resmi

bandar togel online

RTP LIVE

Bandar Toto Macau

Situs Slot Gacor

bandarbola855 resmi

bandarbola855 gacor

bandarbola855 slot

link bandarbola855

bandarbola855 bola slot

bandarbola855 rtp

bandarbola855 slot online

bandarbola855 link

bandarbola855 bandar

bandarbola855 slot terpercaya

bandarbola855

bandarbola855 slot

bandarbola855 terpercaya

bandarbola855 online

slot bandarbola855

bandarbola855 slot

bandarbola855 daftar

bandarbola855 link

bandarbola855

bandarbola855

bandarbola855

bandarbola855 slot

bandarbola855

iosbet

iosbet

link iosbet

slot online iosbet

iosbet link login

slot iosbet

iosbet gacor

iosbet slot

iosbet

slot iosbet

agen iosbet

bandar iosbet

iosbet

iosbet link

bandar iosbet gacor

liatogel

bandar liatogel

login liatogel

live draw hk liatogel

liatogel slot online gacor

liatogel totomacau

liatogel link

slot gacor

daftar slot online

bandar slot dana

slot ovo

slot gopay