You’re a genius! thanks man…that’s simple enough. I’ll finish reading the book and see if NOV has any value at it’s current price point. Thanks again.

Rookie

It’s actually pretty easy to find non-cash expenses. Go to the most recent 10-K for NOV. Then go to the CF statement. See where it says “Change in operating assets and liabilities…”? You want to avoid the line items under that category. Everything above that are the non-cash expenses. That’s it, it’s that easy. So for NOV, Owner Earnings for the most recent fiscal year were: $2,117 million – the average capex.

Hope this helps.

I’m almost done reading the book. So far so good. I’m stuck though on figuring out what should be easy, based on the formula for Owner Earnings, reading the Cash Flow Statement. I’m looking at NOV (National Oilwell Varco Inc.) 12/2009 Cash Flow Statement. Net Inc (1.469m)+Dep & Amor (490k) + Non Cash (???) – 3yr avg Cap Exp (290k). Of course I come up with positive cash of 1.7m. That seems like a ton of cash to me, but without the Non-Cash figure, I cant be sure. What is, and how do I figure out the figure for Non-Cash? I’ve also seen a simpler formula where someone on this website took the Total Cash Flow from Operating activities (2.1m) and subtracted the Average Capital Expenditures of (290k)…obviously I come up with 1.8m in owner earnings – close to my initial figure but still off. Which way is correct? Sorry for all of the questions, but I appreciate the help.

Thanks, Rookie Investor

The model is most sensitive to the median free cash flow growth, as well as the latest FCF number, from which all the calculations are based.

For the example of APOL, you’ll see that the median FCF growth is well north of 20%, so you would be assuming continued growth at that rate in calculating the fair value. This may or may not be realistic, you’ll have to use your judgment. I actually created a “user growth” cell where I can input my own values and be a bit more conservative in the future growth assumptions if they seem unlikely to be repeated.

I’m familiar with SMF addin and have used it prior to upgrading to Office 2008 and Vista. I didn’t think it worked with the new versions but it does. You motivated me to fix a few problems.

For anyone who wants to try this on

http://indiainvestor.word...

be sure to download version 1.1 which is just above the comments section.

I just got it working. I’m glad that I now have a way to evaluate a company. I think I can now answer my own question on a previous post as to why Monhnish sold Stamps.com (STMP).

It’s not worth the current price even though the earnings webcast sounded good to me. I removed my open order at 9.50. The program says buy under $5.89.

I don’t understand some of the analysis yet. APOL for example is selling for $56 per share. The program says it’s worth $161 and to buy it under 121.

Steve

Also here is a useful tool (loosely) based on Joe’s methods by a blogger named Sanjay Shetty: http://indiainvestor.word...

In your book on page 98 it says it says …”download the spreadsheet at wwww.FWallStreet.com to help automate your investing.”

I can’t seem to find the spreadsheet. Do you still have it available?

Steve

When calculating shareholder equity should I exclude goodwill ?

Currently I would just take the total tangiable assets – total liabilities

Any reason if I should include goodwill in the equation ?

rgds,

Joie