[SIDUG]

Justin:

How are you? I would like to offer my sincere appreciation to you for sharing this web site and all the valuable information and tools, especially your MOS Calculator Watchlist.

I'm fairly new to this forum. Like many other members I've read Phil's book, his posts and posts in this forum repeatedly cause I want to make sure I understand the concept and the techniques.

I have also created a spreadsheet to calculate the raw data to arrive at the 5 growth rates(9, 5, 3), which in turn result in the 3 important figures: the FUTURE EPS, RULE#1 P/E, and TTM EPS. From here it’s just a straight-forward compilation to produce the M.O.S. This exercise not only helped me to create a tool to save time in getting final results, but more importantly, help me to understand the technical aspects of the process. I’ve tested my spreadsheets and compare to Phil’s calculator and confirmed their accuracy.

Now I was fairly proud of myself until I see your spreadsheet. Although I haven’t used all the functions(e.g. watch list), I’m blown away by it’s complete automation. Justin: you’re on fire!

I’ve had a minor concern for all this time which I would like your insight: Please bear with me when I give you a little background. As I mentioned before the most important 3 figures are the FUTURE EPS, RULE#1 P/E, and TTM EPS in order to calculate the today’s Sticker Price, hence today’s M.O.S.

As we know, Phil taught us:
1) the FUTURE EPS is the projection of TTM for 10 full years(120 months) from today using the RULE#1 GROWTH RATE(which can vary significantly, but I’m not getting into it)
2) FUTURE EPS x RULE#1 P/E = FUTURE STICKER PRICE (10 full years)
3) Apply the formula <'=pv(rate(15%), 10 year-1,,-Future Price> to FUTURE STICKER PRICE = TODAY’S STICKER PRICE
4) TODAY’S STICKER PRICE / 2 = M.O.S.

Whew! Finally my point: if you use 5 years instead of 10 years to calculate FUTURE EPS and to get the FUTURE STICKER PRICE (5 full years), then work back 5 years to get TODAY’S STICKER PRICE, the result will be quite different. I use the numbers on your sample of SBUX to illustrate, while keeping FUTURE P/E at 8 and an expected return of 15%:

10 years
$1.19(FUTURE 10-year EPS) x 8(RULE#1 P/E) = $9.27(FUTURE STICKER PRICE),
backtrack 10 years: TODAY’S STICKER PRICE = $2.29

5 years
$0.98(FUTURE 10-year EPS) x 8(RULE#1 P/E) = $7.65(FUTURE STICKER PRICE),
backtrack 5 years: TODAY’S STICKER PRICE = $3.81

The difference is almost 66%! then one may be confused how much is the right price. What do you think?

Anyway my thanks to you again and cheers!
Sidug

I'm fairly new to this forum. Like many other members I've read Phil's book, read his posts and posts in this site repeatedly cause I want to make sure I understand the concept and the techniques.

I have also created a spreadsheet to calculate the raw data to arrive