Wednesday, June 03, 2009

ENDP Calculation

I went through my calculations of the three stocks I am considering adding. What I look for when I buy a stock using MFI is whether the trailing 12 month income is sustainable. If the answer is clearly no, then I pitch it. The 2nd item I have looked at (of late) is strength of balance sheet. Recently, if there is any material long term debt, I pitch it again... no questions asked... unless they have substantial cash to offset. I don't over think on Moats, business model, or management team. A tie-breaker for me is often revenue growth. I do have an excel spreadsheet that does all the calculations for me when I enter a ticker symbol. The calculations (in my opinion) do an excellent job of imitating the earning yield and return of capital in the MFI book. Here are the three stocks:
acn tkc endp
Operating Income After Depreciation + 3,138.20 1,739.12 410.75
Minority Interest - Income Account - 458.26 (83.75) -
Income for Calculation = 2,679.94 1,822.87 410.75
Market Cap Yahoo
19,140,000 11,930,000 2,030,000
Share Price
31.22 13.56 17.32
Market Cap Calc + 19,140.00 11,930.00 2,030.00
Preferred Capital + - - -
Debt in Current Liabilities + 1.02 660.28 71.75
Long-Term Debt + 0.53 130.02 362.41
Cash and Short-Term Investments
2,991.45 3,260.48 574.96
Excess Cash - 2,362.92 2,751.94 566.06
Enterprise Value = 16,778.64 9,968.37 1,898.10










Property Plant and Equipment - Net + 708.64 2,096.07 50.01
Receivables + 3,626.06 697.63 361.71
Inventories + - 19.46 94.71
Other Current Assests + 909.44 92.56 121.38
Working Cash + 628.54 508.55 8.90
Accounts Payable - 716.47 319.27 149.65
Current Liabilities - Other - 4,447.57 998.92 437.04
Invested Capital = 708.64 2,096.07 50.01
Earnings Yield 16% 18% 22%
ROIC 378% 87% 821%

So you can see by the formula that ENDP is the best of the three I am looking at. Not a surprise as it ranks the highest in the website. ENDP does have 360m of LTD, but with over 500m in cash I am willing to overlook. 20 analysts have them earning $2.66 in 2009 vs 2.34 last year and $2.84 in 2010. My only concern is Obama and healthcare, not sure how that plays out.
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3 comments:

Homer315 said...

Marsh, is ENDP really all that cheap? PE of over 8, and only growing EPS of around 10, it's not spectacularly cheap in my opinion. I am about to make purchases today in three different accounts and am trying to narrow down the field.

If you're looking at a healthcare stock, why don't you check out AHCI, which was on the screen as of last week for companies over $69m, and is actually a UK healthcare company (so should be immune to Obamacare). It ranked pretty high for me in the technical analysis I do for the stocks I'm looking at, and has also had some excellent relative strength the last 3,6, and 12 months.

I'm also probably buying IPHS, NOV, SOLR, INT, CKSW, and a couple of others to spread around. I was looking at HUBG too, but it popped 15% today. Oh well.

11:23 AM
Marsh_Gerda said...

I recently sold my AHCI for a very nice profit, I bought it back in January. If it pulled back I might buy it. What I like about ENDP is that they are growing, so their P/E (or earning yield of 22%) does seem reasonably cheap to me. I own CKSW (also bought in Jan)... might consider INT or SOLR.

6:10 PM
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6:59 PM

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