Our process allows us to look at the future prospects and determine what the market is using for its collective future assumptions. If they can, they are properly valued today. Some companies can grow at these rates but the majority can not. Using our cash flow model, we are able to place a value on the stock price, given the growth rate assumptions. This section has tried to address some of the many distortions and pitfalls that are created using accounting, earnings or historical data to value the future prospects of a business.
Cash is clearly a better starting point.
It makes for more accurate comparisons between companies and industries. It allows the investor to make subjective decisions about the future using today s market and corporate data. We strive to understand what the market is using to value businesses. Cash flow data gives us the unique insights we need. The only way to beat the market is to find out where the surprises are and be there ahead of the crowd.