GLEN ARNOLD INVESTMENTS
  • About
  • Henry Spain
  • Books
    • My Books
    • Other Books
  • Blog
  • Portfolio
    • Buffett-style
    • Modified price earnings ratio
    • Net Current Asset Value
  • Resources
    • glossary of investment terms >
      • A - B
      • C
      • D - E
      • F - G
      • H - I - J - K
      • L - M - N
      • O - P
      • Q - R
      • S
      • T - U - V - W - Y - Z
    • TOP 10 TIPS FOR INVESTORS

Valuing shares - metrics used by Anthony Bolton

14/10/2021

0 Comments

 
Anthony Bolton, the great British investor, does not have a favourite valuation measure because he likes to look at a range, believing it dangerous to focus on only one. Note that for all the measures listed below he looks at them both on an absolute basis and on a relative basis.
Absolute values are particularly useful at market extremes to avoid being sucked into a share at times of great exuberance.
The measures:
Price-earnings ratio.
He normally looks at the ratio of price to predicted earnings for the current year, and for the next two years. He is particularly looking for companies that are priced at less than 10 times the earnings in two years from now.
Cash flow yield well above prevailing interest rates.
Free cash flow as a percentage of market capitalization. Looking for a high cash flow calculated after paying for changes in working capital and capex as a percentage of the amount investors are paying for the shares. This is both a useful input to valuation estimations and for financial solvency consideration.
Enterprise value (EV) to gross cash flow
or EV/EBITDA.
EV is the market value of the company’s shares plus its net debt
Gross cash flow is before deduction of interest
EBITDA – Earnings before deduction of Interest, Tax, Depreciation and Amortisation
EV is adjusted down to the extent that there are minority interests and pension fund deficits.
This is a measure examined by companies when valuing a prospective acquisition, it is therefore useful if you are interested in anticipating potential take-over bids.
Prospective free cash flow per share. Next year’s estimated FCF.
Price of shares relative to sales per share, and EV to sales
Particularly useful for loss-ma
0 Comments



Leave a Reply.

    Picture

    Glen Arnold

    I'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk

     investing is about making the right decisions, not many decisions.

    Categories

    All
    Berkshire Hathaway (NYSE:BRK.A)
    Caffyns
    Capital And Counties
    Character Group
    Charlie Munger
    Connect Group
    Daejan-lsedjan
    Dewhurst-lsedwhta
    Highcroft
    Investment-ideas
    Investment Philosophy
    John Templeton
    J Smart
    McCarthy And Stone
    MS International
    Orchard Funding
    Samuel Heath
    Tandem
    TClarke (LSE:CTO)
    Town Centre Securities
    Wynnstay

    Archives

    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    October 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020

    RSS Feed

In the short-run, the market is a voting machine – reflecting a voter-registration test that requires only money, not intelligence or emotional stability – but in the long-run, the market is a weighing machine.  Benjamin Graham




  • About
  • Henry Spain
  • Books
    • My Books
    • Other Books
  • Blog
  • Portfolio
    • Buffett-style
    • Modified price earnings ratio
    • Net Current Asset Value
  • Resources
    • glossary of investment terms >
      • A - B
      • C
      • D - E
      • F - G
      • H - I - J - K
      • L - M - N
      • O - P
      • Q - R
      • S
      • T - U - V - W - Y - Z
    • TOP 10 TIPS FOR INVESTORS