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v.E.1

Financials

See the 10-year summary under Key ratios. See BuffetLink and MorningStar

1. Market Price
2. Earnings = Net Income/share. Earnings or profit per share must be +ve and consistent 
3. Book Value(Equity)/share = Margin of Safety = Equity/Shares Outstanding. Should be + ve increasing and linearly predictable
4. Earnings/share=NetIncome/SharesOutstanding
5. PE = MarketPrice/EarningsPerShare = 'x'=Return i.e., for every 'x' $ I spend, I get $1 back a year. PE <= 15 i.e., Return > 6.6%
6. Price/BV= 'y' ie for every 'y' you spend in buying company,  you have $1 equity in biz. Better if this ratio is closer to 1 best if <1 .="" b="" but="" if="">P/BV <1 b="">, then usually earnings are low and the tradeoff is better safety and return. i.e., P/BV < 1.5 i.e Safety > 67%
7. P/E times P/BV < 22.5
8. PEG ratio < 1 for undervalued stocs. PE/PEG=projected earnings growth%=R
1. Current EPS=a0, EPS_in_10years = a10= a0(1+R/100) pow 10. So with PE =8.7 the value should be 8.7 time a10 for it to be worthwhile.
9. Debt/Equity <0 .5="" b=""> consistently
10. Current Ratio >1.5 i.e how the company handles debt in next 12 months
11. Stock must not have large debt and stock must be undervalued, P/BV <1 .="" div="">
12. Dividend - will it grow or be consistent next 10 years

Others:

See the total current liability and assets in Balance Sheet since it represents activities for the next 12 months the company forecasts. See how the total current assets and liabilities compares to total current assets in next 12 months to see cash flow inference short term. So is the equity changing in the next 12 months. <1 be="" company="" debt.="" div="" has="" inheriting="" means="" more="" to="">

Stock must be undervalued so we need to calculate the intrinsic value = cash that can be taken out of business during its remaining life. If I take out all the profit from the company for all the 10 years that I own then what will it all add up to. Remember BV and dividend comes from EPS so always look at projected earnings to ensure your estimated cash flow in future is realistic and analysts talk about 2 years conservative. You need the following:

Current Dividend, Current BV, Gradient of BVC,current value of 10-year treasury note under yield curve rate. We assume that BVslope and dividend slopes are predictable in a chart.

Long Term prospects :Capital gains tax