When people talk about the Quality of Earnings, what they usually mean is how well do current earnings predict future earnings. This is, literally, the textbook definition of earnings quality. The problem with this definition, however, is that it favours the stability of earnings above anything else. What if, as an example, a future stream … Continue reading Embedded Optionality | FRMO Case Study
Tag: Fundamental analysis
Origo and the value of Tempo Software
Origo is an Icelandic IT company listed on the Nasdaq OMX Iceland stock exchange. The company employs over 500 people, offering IT solutions ranging from hardware, software, consultancy and technical services. In addition to its Icelandic operations, Sweedish-based Applicon AB and Tempo Solutions operate as fully owned subsidiaries. Origo 2017 Financials In 2017, the company … Continue reading Origo and the value of Tempo Software
The Penman-Nissim model of profitability analysis
Stephen Penman is a George O. May Professor of Financial Accounting at Columbia Business School. He is the author and co-author of acclaimed financial valuation textbooks, such as Financial Statement Analysis and Security Valuation as well as books aimed at a more general audience, such as Accounting for Value. The Penman-Nissim Profitability Framework In 1999, Doron … Continue reading The Penman-Nissim model of profitability analysis
Fundamental Finance vs Value Investing
Most investors equate Fundamental Finance with Value Investing. Although all value investors are fundamentalists, not all practitioners of fundamental finance can be defined as value investors. Both approaches focus on Security Analysis and the discovery of Intrinsic Value but Fundamental Finance branches into areas such as control situations, distressed and credit investing, as well as … Continue reading Fundamental Finance vs Value Investing
Nutrisystem: no-repurchase scenario
Below you will find a reformulated statement of Common Equity adjusted as if the company had not repurchased any shares in 2010: It is my opinion that management purchased shares at a premium and therefore destroyed intrinsic value. I am in favor of stock repurchases but only as long as they are made at a … Continue reading Nutrisystem: no-repurchase scenario