How to Measure a Company’s Competitive Advantage
How to Measure a Company’s Competitive Advantage | Morningstar
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Showing posts from September, 2024
What to look for before buying a stock.
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What to look for before buying a stock. Net Margin (Profit Margin) EPS - In Morningstar look at EPS history in financial tab. Merely looking at a ten-year summary of a company's per share earnings will tell you great deal about a company. Look for a company that has shown a strong upward trend in per share earnings over the last ten years Look for companies with histories of strong EPS earnings that have suffered temporary setback in the most recent year ROE (Return on equity) - (>15%) In Morningstar look at Operating performance tab. Key Points: Check for initial rate of return. If you paid $25 a share for a stock that was earning $5 a share (EPS), you would be getting an initial rate of return of 20% ($5 ÷ $25 = 20%) Relative Value to Treasury Bonds: EPS ÷ Return on treasury bonds = Relative Value of Stock. Then you can compare with Current Market Price Source: Buffettology