Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Joe – Here is my biggest weakness. I don't know enough about company evaluation so don't have a good intuative sense of what makes a company a good investment. For Tyson I looked at whether the majority of analysts rated Tyson as a buy. They did so I decided to take a closer look.

Here are some of my assumptions.
Cost of Borrowing: 4.8% (Assumed default spread of 1.6%, added to T-Bond Rate)
Beta: .8
Market Risk Premium: 4%
Growth Rate of EBIT = 3.5% per year and 3.5 after year 10
Reinvestment Rate: Starting at 8% and changing to near industry average in 10 years (20%)
For now I have excluded operating leases.

It seemed to me that I have assumed a pretty conservative growth rate and normal reinvestment rate and they still appear undervalued, so a buy to me. Let me know if you need other information. Also feel ask questions. I am new to this.


Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.