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GILD, Gilead Sciences, Inc. [Edit or Delete]
Executive Summary
Economic Value Added Analysis
Effective Date: Dec 7th 2009
Strategic Score 90%
Financial ratio analysis is used to assign a Strategic Score for a company. The ratio analysis is based on 4 segments: Liquidity, Debt, Profitability and Cash Flow ratios.
Return Spread 23.0%
Economic profit can be calculated in percentage form, usually expressed as a ‘return spread’. The return spread is simply the ROIC minus the WACC in percentage. When this return spread is positive, it means the company is generating surplus returns above the cost of capital and that translates into higher intrinsic value
Investment Return 6.8%
The Return on Investment is based on an estimated 5 year projection if the stock was purchased at today's price. This return is expressed in CAGR % for this 5 year period. The estimation takes into account, the current level of EPS, the analysts estimated 5 year growth rate for the company, discounted against the company's current WACC.
Rating A Strong Buy
Company Rating is established by combining its Overall Strategic Score and its Return Spread. Ratings can range from A to D
A: Strong Buy, B: Potential Buy, C: Hold, D: Sell. Ratings are complied on a regular basis following Company Quarterly results.
Optimal Price $36.22
The Optimal Purchase Price of the company is based on analysts 5 yr estimated growth rates and company current WACC, but solved against a 10% CAGR. The price shown indicates the purchase price of the investment if it was to yield a 5 year 10% CAGR based on it's estimated growth rates discounted against its current WACC.
EVA Base Value 37.96
The EVA base value corresponds to the current Economic Profit, or EVA discounted in perpetuity against company WACC. This value can be referred to as implied MVA, market value added. The total MVA is added back into the current Investment Capital (Total assets minus Non-interest-bearing current liabilities). Expressed by the following formula: EVA base value= Implied MVA + Investment Capital divided by Outstanding shares
The principal objective of the Cash Flow Portfolio is to generate reliable and consistent income from investments, while protecting investment capital through diversification. This income may come from stock or mutual fund dividends, interest from bonds and money market investments. Other forms of positive cash flow may be capital gains from sales of equities or from exchange of foreign currencies.
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About Me
TLassen is a 50-something private investor, despite being licensed for securities trading and portfolio management in Canada, has found himself in the Manufacturing environment for the last 30 years. His career has been spent predominantly in the aerospace industry and he is currently responsible for maintaining compliance to AS and ISO standards for a midsized company in Montreal.
His investment methodology is based on the concepts of economic added value. In plain English, investment returns have to be measured against investment costs. He uses fundamental analysis at the company level to identify best of breed companies and combined with the principles of economic added value, selects companies for long term investments.
The subtle point of Warren Buffet's statement, 'it is better to find a great company at a fair value, than a fair company at a great value' is often missed by investors who attempt to find undervalued companies regardless of their financial health. He belongs to the Buy and Hold camp, but has learned over the years to be flexible by taking profits off the table occasionally.
TLassen maintains 2 portfolios whose principal objectives are to generate reliable and consistent income while protecting investment capital through diversification. This income may come from stock or mutual fund dividends, interest from bonds and money market investments. Other forms of positive cash flow may be capital gains from sales of equities or from exchange of foreign currencies.
In other words diversify, diversify, and diversify some more, between and within the 4 asset classes: Stocks, Bonds, Cash and Tangibles.
His investment methodology is based on the concepts of economic added value. In plain English, investment returns have to be measured against investment costs. He uses fundamental analysis at the company level to identify best of breed companies and combined with the principles of economic added value, selects companies for long term investments.
The subtle point of Warren Buffet's statement, 'it is better to find a great company at a fair value, than a fair company at a great value' is often missed by investors who attempt to find undervalued companies regardless of their financial health. He belongs to the Buy and Hold camp, but has learned over the years to be flexible by taking profits off the table occasionally.
TLassen maintains 2 portfolios whose principal objectives are to generate reliable and consistent income while protecting investment capital through diversification. This income may come from stock or mutual fund dividends, interest from bonds and money market investments. Other forms of positive cash flow may be capital gains from sales of equities or from exchange of foreign currencies.
In other words diversify, diversify, and diversify some more, between and within the 4 asset classes: Stocks, Bonds, Cash and Tangibles.
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