Warren Buffett's Secret "Value" Formula

Warren Buffet Documentary. Warren Buffet MBA. Warren Buffet 2011. Value Investing

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[martindj10]

Where do you find the companies net earnings and dividend?

[MrAlanKendall]

@martindj10

I use the google stock screener. If I know the ticker for a company I use msnmoney and after I look up the ticker for a stock, On the new screen I then click on "Financial Highlights" and it gives me the "Net Profit Margin", "Dividend Yield" and I calculate the price-to-book by taking the share price and dividing it by the "Book Value/share".

[bushmais2000]

@mralankendall i tried using ur formula for the bershire hathaway ( which is buffet company) i got a silly number this is my formula 7023+0 / 1.19 =5901 ... Can you help me figuring out what this means !! thanks

[MrAlanKendall]

@bushmais2000

From Clearstation key rations I get (8.48 + 0) / 1.21 = 7.0 which is not undervalued (over 10) nor overvalued (less than 2).

[jamestakeshi]

You are totally misleading people! Warren said, he values the entire company and not the stock of the company. You know that takes a lot of effort to do. You have to do discounted cash flow, figure out the right discount rate, adjust according to WACC, etc! This formula is for technicians not fundamentalists.

[MrAlanKendall]

@jamestakeshi

Because the formula uses price-to-book and net earnings, it is both a technical and a fundamental formula. When I get a bad score, I see if is because of bad earnings or too high a price-to-book. If I get a good score I can tell if it is because of a low price-to-book or spectacular earnings. The formula is a good screen to help me to evaluate the fundamentals of the comapany and stay away from over priced companies. Price to book is not the same as the price of the stock.

[martindj10]

@MrAlanKendall I don't know what the ticker for a company is. But when i choose a company i can find their 'Net profit margin' and 'Net income' when i click on 'Finansials'- but not their 'Net earnings'.

[skaha65]

@martindj10 Go to Global Investor . com. Mcd is now over $100 and this is Feb 2012

[darkreeze]

is net earning = earning per share of that year? is dividend = dividend per share of that year?

is dps= 21.0 (cent) the same as 21% in percentage.?

thx in adv

[CENTAURSARATOGA]

@TheRadar1996 Where do the numbers 7023 & 115,325 come from ?

[stickysound]

Thanks a lot.

[butzloffrost]

@MrAlanKendall nice find!



[Commodorian]

This is great stuff. You just gave me an idea to write a little application that scans every single stock and sort all the results.

[fadedflage]

I have found this formula a valuable tool. Thank you sir.