Originally Posted by
winner69
Acid man - doesn't the man himself actually use 'owners earnings' for something?
OK RBD 'owners esrnings' at $25m or whstever it is sounds impressive and that is all that matters to you? Doubt it
The man himself uses 'owners earnings' as a basis of calculating the intrinsic value of the company (or at least thats the story but prob Munger does that). The intrinsic value being the NPV of future 'owners earnings'
Taking RBDs $25m and using a 10% required return and no future growth whatsoever the intrinsic value of RBD is about $2.40 ..... todays price ,,,,,, and that is allowing for no growth in earnings .... no growth forever.
Put 3% growth in the intrinsic value is about $3.00 and 5% growth is about $3.30
So expect RBD to grow and it is still a screaming buy .... thats why Snoopy isn't selling
The enigma with RBD is what can you expect future growth to be. Revenues are about the same as 10 years and they have for zonks been around the $300m plus or minus a bit mark. The last 2 years have been good and they have achieded 3% odd growth. Earnings have risen from better margins and reduced overheads with a record EBIT margin being reported this year. The question is is this record margin sustainable which could affect earnings growth into the future.
All looks good on paper doesn't it .... the charts looks OK as well .... so as P would say why sell if you already have .... and prob no reason why you shouldn't buy either