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Author: StevnFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 212961  
Subject: Re: Oustanding link Date: 7/19/2012 6:29 PM
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I decided to do a mini earnings based analysis of these 20 companies.  
First I removed the following as too hard (earnings based valuation 
probably not appropriate):

BRKA
WFC   (Bank)
AFL   (Insurance)

I then removed:

GD     (Too much weapons for my liking)
OMC    (Advertising agency - unsure of predicatability of earnings - see chart).

I then looked at balance sheets and removed 1 further company which is 
probably OK, but the balance sheet seemed to me to be much weaker than 
the rest on the basis of comparing (Total Liabilities - Total Current 
Assets) to Annual Earnings.  This company was:

FISV

That left me with 14 companies.  For these I made a guestimate of the 
EPS in 10 years time purely by extrapolating from the charts what 
seemed like a plausible estimate.  If the slope of EPS growth in recent 
years had dropped off, I accounted for this rather than looking at the 
long term growth.  Overall, I would say my estimated are on the 
conservative side of a central estimate.

I then estimated the price in 10 years assuming a P/E at that time of 13.6.

I then estimated an average dividend yield adjusting somewhat for 
change of P/E.

Using these estimate and the current price, I then estimated the total 
return CAGR.

The results?

	10Y P	Yield	P-now	CAGR
STJ	167	2.30%	38.17	18.23%
ORCL	148	0.80%	30.79	17.80%
MSFT	93	2.60%	30.72	14.29%
SYK	168	1.60%	52.32	14.00%
WMT	184	2.30%	71.59	12.22%
WAG	79	3.50%	34.24	12.22%
BDX	185	2.40%	75.98	11.71%
MDT	86	2.50%	39.09	10.74%
ABT	125	3%	65.92	9.61%
PEP	127	3.50%	70.37	9.56%
MMM	168	2.70%	90.78	9.05%
JNJ	115	3.60%	69.3	8.80%
PG	101	4.20%	64.97	8.68%
KO	115	3.00%	77.09	7.08%

So ...

Any takers for STJ and ORCL?

Any insights into these companies?

StevnFool
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