https://drive.google.com/file/d/0B13mmqYv8FNKSEZrVndHTkcxT1k…
Eddie,
About the charts. I’m not sure what charts, if any, Saul uses today. I’m hoping the above link works that shows examples of the old charts Saul was using.
These charts were used for companies with earnings on an EPS basis so I’ll start there and then talk about what could be used for valuing on a P/S basis.
What you are seeing is a semi-log chart with TTM EPS on the left axis and price on the right axis. The horizontal axis is time where each unit represents one month. Every three months you see a point on the graph representing TTM EPS that quarter and lines connecting those points. The steeper the line the faster the EPS growth (and vice versa).
The low, high and closing prices for each month are depicted with the vertical bars (close is the horizontal mark).
Finally, prices falling above the EPS point or line had a PE greater than 20 (vice versa).
The same thing could be done for companies without earnings primarily valued on a P/S basis. Here revenues would be on the left vertical access and market cap would be on the right. The x-axis would stay the same. However, the market cap would take the place of price for the vertical bars and would take a bit of additional calculating.
Not sure of the basis. Maybe a 15 P/S would be a good basis? The range for the left y-axis would run from $100M to $1,000M before a new chart would need to be started going from $1,000M to $10,000M.
Might be interesting to look at some charts like this. They are a good reference tool for quickly checking on valuations, and once they are built, are relatively quick to update.
A.J.