No, these numbers are wrong and misleading except for the most uncomplicated figures that can be taken at face value like outstanding shares etc.
They amalgamate very important distinct components of a business to provide you half a dozen simple measures that are there for mass consumption instead of real investor scrutiny.
No buy-side or sell-side analyst uses those stupid numbers.
For example they say "book value". What does book value mean to them ? --
"Represents what the shareholder owns of the company, after netting total liabilities from total assets. It includes both tangible and intangible assets."
What the fck ... I'm not interested in what shareholders own of the company.
I'm interested their marginal growths in retained earnings minus contributions year on year as an indicator of true performance.
"Earnings Per Share ?" -- what does that mean ? Break it down. How much of it was interest bearing, how much of it was core business, abnormals, depreciation ? did anybody bother to see if it's nominal or inflation adjusted ? ...
Brokers will fudge these numbers. Why ? because they know YOU cannot look at P/e or P/b or P/eg etc and know what their particular allocations are; What they included, what they ommitted, and what their excuses are (which are well within their prerogative(s) and your Acceptable Usage Policy).
For one thing some so-called "earnings" figures these brokers dish out are not net of debt ! They can get away with it. Why ? because there are different _types_ of debt. Some that effect cash flow, some that don't. Some that are considered part of the balance sheet and some are not. Some debt can be transfered to equity so as not to impact the balance sheet and therefore boost ROA etc. These will come back and bite YOU up the 4ss one day.
For manage investment businesses and/or insurance for example, what are "earnings" to them ? Can you tell me that they have not written off or freed up provisions simply to boost current year's profit numbers ?
CommSec EPS won't tell you any of these things.
This blanketted coverage of "key measures" are stupid.
And different businesses are effected by different numbers differently.
Just because there's a "P/e = 2" or "P/e = 30" means jack sht to me.
Let me correct you when you say that the "P/e Valuation" that you use is a "simplified" version of DCF.
That's the biggest crock of sht I heard :)
The P/e thing you use is ->nothing<- like the DCF :)
