Sure but when using methods like Montgomery (as you have so well described), the clincher is
the future ROE.
As
@noomxx says the intrinsic valuations vary widely if you use different ROE's in the formula.
This is the skill...
What ROE do you use???
Do you average? Do you use the lowest mode? What? And remember you are always using
past financials
Even good companies like this one can have a few bum years and ROE drop to 5-10% and that smashes the forward comparison to the 10yr bond yield
The skill in using this type of "Buffet" type valuations is only applying them to companies that never have a bad few years that destroy ROE..
This is an extremely hard unicorn to find in the markets these days as there is so much disruption, corruption, BOD that flip decisions, ASX rules that allow CR's if things go a bit sour etc etc
Who can predict "the future" with so many black swans around?
But sure.. at least these sort of valuation methods are a start..
Just MO
(20min delay)