The Intelligent Investor
Investing
Assess a company’s performance
from The Intelligent Investor by Benjamin Graham
How to Apply This
- Consider profitability.
Look at overall profits and the rate of return on invested capital. - Assess stability.
Find the maximum decline in the per-share earnings over the last decade. This indicates what happens in a bad year. - Calculate growth.
Look at revenues and profits growth and then compare them with the assets/debt multiplier. - Investigate the financial position.
Compare the financial position with some of its direct competitors to see how the company performs in the industry. - Check dividend yield and consistency.
Make sure they have paid out regular and consistent dividends in the past. - Assess the price.
Look at the price history to understand what other traders do and how the market reacts to changes in the industry or company. Compare the price-earnings ratio with its competitors to gauge the fairness of the current price.
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