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"To illustrate, let's look at Seaboard (SEB), which has food processing and shipping interests.

Key data:

Stock price: $1,850
Shares outstanding: 1.26 million
EPS: $203
Tangible book: $949
5-year growth rate: 7% (my estimate)
Discount rate: 10%

The first thing we do is subtract SEB's tangible book value from the stock price. $1,850 - $949 = $901. Thus, $949 of SEB's $1,850 stock price is explained by its "hard" corporate net worth, and the other $901 by future earnings.

Next, subtract projected cumulative earnings over the next five years from this $901 figure above. Given my estimate of an annual 7% growth rate and a 10% discount rate, the present value of SEB's next five years' worth of earnings is $935. Since $935 is greater than $901, SEB's Euphoria Ratio is 0%. Between SEB's net physical assets and the next five years worth of EPS, you more than cover the $1,850 stock price. Investors are not keen on this business, you can say."

Forgive me for being slow, but how do come up with the present value of SEB"s next five years worth of earnings is $935? I must be doing something wrong. No matter how I run the numbers, I'm not getting $935.....

If anybody knows, help me! It doesn't have to be Hewitt. Thanks!
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