How does Roger Montgomery value Telstra?

In 1999 TLS was the darling of the market. Analysts described it as a wonderful company, going to $20. One analyst even said it would be Australias first $100 stock. Not Roger Montgomery. He said the business was worth $2.70-$2.80. It was trading around $9.

In this interview with Peter Switzer Roger reveals the valuation formula for a business that payout out all of its earnings out as a dividend, such as Telstra.

Roger's valuation formula = ROE/Required Return x Equity Per Share

There are two parts to successful investing: find great businesses and buy them when they are cheap. Just because a business is cheap doesnt mean you should buy it. And Telstra is a mediocre business. Its profit today is that same as its profit a decade ago.

So what will TLS be worth in 2012? Watch Part II, What is Telstra worth?, to find out!

Broadcast 11 March 2010

Visit ‪‪http://www.rogermontgomery.com/ for Roger Montgomerys step-by-step guide to valuing a company.

http://www.switzer.com.au/ from Peter Switzer is an online portal for retail investors and small business owners, offering daily news and articles on small business and personal finance. Switzer also provides industry-leading Financial Planning and Business Coaching services.

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News & Politics

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• Roger Montgomery
• value investing
• stock market advice
• company valuation