Enterprise Value on Earnings / FCF / FFO Band

Enterprise Value per Diluted Share plotted as black line.

Bands start at 5x and stops at 30x, each represents a 5x increment.
Band Options (per Diluted Share, Fiscal Year):
①Free Cash Flow
②Operating Income
③Adjusted Funds from Operations
④Core Earnings
where:

• AFfO = FFO - Unusual Income/Expenses + Tax Distortion (dafault 25% tax rate)
  
• Core Earnings = Net Income - Unusual Income/Expenses + Tax Distortion (default 25% tax rate)
  

These two adjustments are coarse and watered-down, so take them with a grain of salt.
For professional assessments of Core Earnings versus GAAP Earnings you may go to David Trainer at Great Speculations(costs money). I am unaffiliated with these entities.


Tips:

• ①③ are unapplicable to financials.
  
• ③ may work for REIT-like companies whose depreciation is mostly overstated(e.g. hydro-elec utility companies whose dams typically don't wear out in ten years; companies with assets that APPRECIATE in reality but they D&A them anyway).
  
• Probably none works for cyclicals, especially extreme boom-bust cyclicals such as oil, aluminum & shipping etc.
  
• Beware unnaturally low (dividend_payout+buyback)/net_income ratio as some majority shareholders may funnel money to themselves/cronies at the expense of small shareholders.

Disclaimer: Use at your own discretion. No guarantees for any accuracy or usefulness. If you decide to use it, I take no responsibility whatsoever for any consequences. Does not constitute financial advice. Past performance is not Indicative of future results.

版本注释:

Added Cashflow from Operations option.