I'm just getting caught up on the slew of comments here and I wanted to jump in again on this string over on What The Heck Is CROIC? There seems to be some confusion as to how free cash flow and GAAP earnings are related and I figured that this would be a good topic rather than let it get buried in the comments.

Do GAAP earnings drive free cash flow? Or, does free cash flow drive earnings?

Continue Reading From Free Cash Flow To Earnings And Back ››

When valuing a business, you discount the expected future cash back to today to get an idea of what the company is worth. Of course, predicting future cash flows is part art, part science. Piled on top of that is the fact that the discount rate you use greatly affects the intrinsic value calculation. So, what rate should you use?

Continue Reading What Discount Rate Should I Use? ››

$6.22 billion. That's what Wall Street is pricing Amylin Pharmaceuticals (AMLN) at these days. If you are a fan of Efficient Market Theory (Buffett isn't), then you believe that the company is worth that much. You'd also have to believe that the company was fairly valued at $5 back in 1998 and that the value of the business has grown eightfold in the past ten years. Me? I see things a bit differently.

Continue Reading Waiting To Exhale: Amylin Pharmaceuticals ››