I've watched a few of your videos. What I love most is how easy it is to understand what you are saying and to be able to apply it quickly in my investing strategies. Thank you
“ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment, and finally, multiplying it by 100.” 136% = ((47.20-20)/20)x100 55.5% = ((15.50-10)/10)x100
Very straight forward what I'm still trying to understand is. If I owned the bakery that generated the 50k per year. I would recieve income as well as still owning the asset. But if I buy stocks even though the EPS says that the company is generating X income per share. I the investor do not recieve any income. I can only hope for the stock price to increase.
If you own the whole bakery that generates 50k net income you have the choice to declare a dividend for 50k and pocket that money but you also have the option to pay down corporate debt if applicable, reinvest, open another bakery etc. as the 100% owner you will do what is in your best interest considering the long term not just this year. Same thing happens with a public company but it’s the ceo making these decisions on your behalf because that’s the guy the owners hired to do that.. sometimes a dividend is in the best interest of the shareholders, sometimes it’s not. Often it’s not. If you conclude the ceo is not acting in your best interests you should sell your shares (or never buy in the first place). Share price will follow intrinsic value of the long term you just have to trust and have faith in this truth.
Thanks for sharing this key fundamental. I have trouble still on which value to use for earnings. It seems like their are so many values after adjustment. New subscriber here!
Glad it was helpful! Yes I hear you. Sometimes a metic like Enterprise Value / Free cash Flow can be a better choice. Buffett's "owner earnings" is also worthwhile but you'll need to calculate that for yourself because it's not on financial websites. Thanks for the support.
I don’t understand the question however it’s good to look at the companies historical returns on capital. Something companies can reinvest a high returns. Other companies need to sink most of their cash into staying where they are.
We can see historical growth rates and make conservative guesses. I think it’s actually better to look at a companies historical returns on capital though. Some other videos on here I talk about return on capital.
Hi. For example, the situation is as follows: I am seeking financing to acquire a business. I approached a potential investor who asked several questions, one of which was: What is the Debt/Equity ratio of financing? Now, I'm wondering and feeling confused about what the potential investor means by asking this question. Is "Debt/Equity ratio of financing" the same as "Debt/Equity ratio," or is it something else?
Great information regarding that there is more to it the just looking at the PR ratio. And the importance for net income vs gross income. Thanks for all the great information.
If the company is a small cap and has growth potential of 2x next year the PE even if currently 100 would be halfed. I say market is always future looking growth.
That's kind of the job you're signing up for when you decide to buy business (stocks). And it's why you want to also be very conservative with your estimates so that there is a "margin of safety" AKA lots of room for you to be wrong and still wind up on top. Thanks for your comment :)
Company B Growing by 5% Year 1: $1.00 EPS Year 2: $1.05 Year 3: $1.1025 Year 4: $1.157625 Year 5: $1.21550625 Year 6: $1.2762815625 Year 7: $1.340095640625 Year 8 $1.40710042265625 Year 9: $1.477455443789063 Year 10: $1.551328215978516 I rounded it down to $1.55 per share. IF the shares are STILL trading at 10X earnings on the market, that would translate to a share price of $15.50. For company A growing by 10% Year 1: $1.00 EPS Year 2: $1.10 Year 3: $1.21 Year 4: $1.331 Year 5: $1.4641 Year 6: $1.61051 Year 7: $1.771561 Year 8 $1.9487171 Year 9: $2.14358881 Year 10: $2.357947691 I rounded it up to $2.36 per share. IF the shares are STILL trading at 20X earning on the market, that would translate to a share price of $47.20. Hope this helps.
@@IntelligentStockInvesting yes thank you so much now I understand everything, but why don't you make more videos? I saw a couple of them you are doing a great job
@@grishi493 The time investment isn't worth it for me right now. I will make videos again someday but for now, I'm busy with other things. Still investing my own money of course.
The forward P/E ratio is a current stock's price over its "predicted" earnings per share. Not sure who’s making these predictions.. Earnings per share growth rate you just look at what earnings per share was 3-5 years ago compared to now and determine the rate at which it has grown annualized.
Noted. Thanks. I'm naturally pretty low energy and a slower speaker so I'm trying to find a balance of upping the energy to keep people engaged but also stay authentic. I'll find the sweet spot eventually :) thanks for your support!
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It’s so good he is explaining it in sign language too
HAHAHA!
😂😂
I appreciate this guy explains things in a very simple and straight forward way that makes it easy to follow along. Great job!
Perfect I’m glad it helped :)
I've watched a few of your videos. What I love most is how easy it is to understand what you are saying and to be able to apply it quickly in my investing strategies. Thank you
Wow thanks Lev I really appreciate your commenting to let me know that :)
Hello, where do you get this data from ? By the way , excellent clarification/explanation.
hey there for the last part around 9:20, how did we get the ROIS of 136 and 55.50 percent?
“ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment, and finally, multiplying it by 100.”
136% = ((47.20-20)/20)x100
55.5% = ((15.50-10)/10)x100
the best teacher i never had until now 🥸
Good!
The best video ever on explaining PE.
Oh thanks for this great comment
I recently came across your videos and I love them! You explain things so well. I just wish you were still making videos!
thanks man the example was great
Perfect :)
Clear and easy explanation to understand. Thanks!
Perfect! Glad you enjoyed it :)
Well explained with good examples. Thank you for posting.
Great explanation of p/e and more.
Thanks
Thank you so much,best video
Awesome... Such a great example... Learnt with simple way... Thank you very much Richard..
My pleasure I’m glad it was informative for you:) thanks for your support - from me and my girlfriend (the awesome video editor)
That is one great explanation. Thanks.
Very educational. Thanks for making such a good video.
your videos very clear love it.
Good I’m glad it helped :)
Great video. Easy to understand
Great explainer thank you
Very straight forward what I'm still trying to understand is. If I owned the bakery that generated the 50k per year. I would recieve income as well as still owning the asset. But if I buy stocks even though the EPS says that the company is generating X income per share. I the investor do not recieve any income. I can only hope for the stock price to increase.
If you own the whole bakery that generates 50k net income you have the choice to declare a dividend for 50k and pocket that money but you also have the option to pay down corporate debt if applicable, reinvest, open another bakery etc. as the 100% owner you will do what is in your best interest considering the long term not just this year. Same thing happens with a public company but it’s the ceo making these decisions on your behalf because that’s the guy the owners hired to do that.. sometimes a dividend is in the best interest of the shareholders, sometimes it’s not. Often it’s not. If you conclude the ceo is not acting in your best interests you should sell your shares (or never buy in the first place). Share price will follow intrinsic value of the long term you just have to trust and have faith in this truth.
Thanks for sharing this key fundamental. I have trouble still on which value to use for earnings. It seems like their are so many values after adjustment. New subscriber here!
Glad it was helpful! Yes I hear you. Sometimes a metic like Enterprise Value / Free cash Flow can be a better choice. Buffett's "owner earnings" is also worthwhile but you'll need to calculate that for yourself because it's not on financial websites. Thanks for the support.
Great video, thanks!! 🙏
Getting to the point where I find myself looking forward to the new videos every week. Nice work again guys
Thanks Will 🙏🙏
I love that explanation, very simple..thanks
Thanks JB!
Great job
keep up the good content!
Thanks Meixo!
Awesome, thanks. Is the second part Forward PE?
It’s PEG
can you compound the earning per share that they make more profit annually or is it a company insider stuff?
I don’t understand the question however it’s good to look at the companies historical returns on capital. Something companies can reinvest a high returns. Other companies need to sink most of their cash into staying where they are.
Thank you!
How do we calculate EPS growth rate in the future?
We can see historical growth rates and make conservative guesses. I think it’s actually better to look at a companies historical returns on capital though. Some other videos on here I talk about return on capital.
Well explained 👍, thank you!
Glad it was helpful! Thanks for being a subscriber and for commenting I appreciate your support Gyula :)
Best video
Hi. For example, the situation is as follows: I am seeking financing to acquire a business. I approached a potential investor who asked several questions, one of which was: What is the Debt/Equity ratio of financing? Now, I'm wondering and feeling confused about what the potential investor means by asking this question. Is "Debt/Equity ratio of financing" the same as "Debt/Equity ratio," or is it something else?
I think this person would be referring to the same thing, yes.
Send them the financial statements they’ll need them anyways
@@IntelligentStockInvesting Thank you.
Great information regarding that there is more to it the just looking at the PR ratio. And the importance for net income vs gross income. Thanks for all the great information.
Glad it was helpful!
You have a talent for explaining... Just need to find your niche so your content becomes higher value add. I'll follow you on your journey. Good luck.
Thanks Louise :) Stock investing is what I'm most passionate about and I've got a lot more to say/teach on the subject :)
If the company is a small cap and has growth potential of 2x next year the PE even if currently 100 would be halfed. I say market is always future looking growth.
Great , Watching Everyday
Respect! Gad you’re enjoying! If you have any questions at any point I’m here for you
Cool, thanks 😊
Who can reliably predict earnings growth into the future beyond 1-2 years?? 2020 has given a clear answer to that.
That's kind of the job you're signing up for when you decide to buy business (stocks). And it's why you want to also be very conservative with your estimates so that there is a "margin of safety" AKA lots of room for you to be wrong and still wind up on top. Thanks for your comment :)
You can wait for good business shre price lower than book value. And events like 2020 gives more oppurtunity to buy good business below the book value
great, thanks!
You're welcome!
How did you obtain 47.20 and 2.36 or the 15.50 and 1.55? 9:39
Company B Growing by 5%
Year 1: $1.00 EPS
Year 2: $1.05
Year 3: $1.1025
Year 4: $1.157625
Year 5: $1.21550625
Year 6: $1.2762815625
Year 7: $1.340095640625
Year 8 $1.40710042265625
Year 9: $1.477455443789063
Year 10: $1.551328215978516
I rounded it down to $1.55 per share.
IF the shares are STILL trading at 10X earnings on the market, that would translate to a share price of $15.50.
For company A growing by 10%
Year 1: $1.00 EPS
Year 2: $1.10
Year 3: $1.21
Year 4: $1.331
Year 5: $1.4641
Year 6: $1.61051
Year 7: $1.771561
Year 8 $1.9487171
Year 9: $2.14358881
Year 10: $2.357947691
I rounded it up to $2.36 per share.
IF the shares are STILL trading at 20X earning on the market, that would translate to a share price of $47.20.
Hope this helps.
@@IntelligentStockInvesting yes thank you so much now I understand everything, but why don't you make more videos? I saw a couple of them you are doing a great job
@@grishi493 The time investment isn't worth it for me right now. I will make videos again someday but for now, I'm busy with other things. Still investing my own money of course.
@@IntelligentStockInvesting I understand, anyway thanks for those videos I'm learning a lot
no problem :)
Is growing EPS the same as future EPS?
Sorry I don’t understand the question
@@IntelligentStockInvesting I think I'm mixing up Forward P/E Ratio with growing EPS.
The forward P/E ratio is a current stock's price over its "predicted" earnings per share. Not sure who’s making these predictions..
Earnings per share growth rate you just look at what earnings per share was 3-5 years ago compared to now and determine the rate at which it has grown annualized.
@@IntelligentStockInvesting got it! Thanks!
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How did he get the ROI % on the last example of this video?
You should make a video About growth stocks without pe😊
I could possibly do something like that :) what would you suggest I title such a video?
This guys is really intense.. really in your face. He probably french kisses dividends. Go dude!
Haha, thanks..? 😘
the E in PE is earnings PER SHARE. Not exactly earnings. Am i wrong?
Price per share / earnings per share OR market cap (which is essentially the price for the entire company) / total earnings.
@@IntelligentStockInvesting Ah i see. Thanks for the explanation! I am still new to investing.
No problem
Thank
Why can't I save this video???
🔥 🔥 🔥
Less hands movement please. Distracting.
Noted. Thanks. I'm naturally pretty low energy and a slower speaker so I'm trying to find a balance of upping the energy to keep people engaged but also stay authentic. I'll find the sweet spot eventually :) thanks for your support!
Stop moving your damn hands so much. Geeze.
Thanks for your feedback