Posts by: WST Expert 1
Re: Question on adjustment of pre opening expense on diluted normalized EPS
The $15,999 was indeed a one-off item since it was added back. F77 is reported EBIT, so we're adding F78 to get Adjusted EBIT. Costco happened to give us adjusted EPS hence the $0.94 input.
The $15,999 was indeed a one-off item since it was added back. F77 is reported EBIT, so we're adding F78 to get Adjusted EBIT. Costco happened to give us adjusted EPS hence the $0.94 input.
Re: Questions on the slide (various aspects) - 6 questions
Many of these are explained the videos; may we suggest to go back and re-view the videos again; in the meantime, short answers: 1) PF because that's what they'll report going forward 2) Conceptually yes, but in retail, Same Store Sales is best metric for organic so you don't have to worry about ov... Read More
Many of these are explained the videos; may we suggest to go back and re-view the videos again; in the meantime, short answers: 1) PF because that's what they'll report going forward 2) Conceptually yes, but in retail, Same Store Sales is best metric for organic so you don't have to worry about ov... Read More
Re: Questions on the slides (8 questions)
1) Yes, include kp because it is part of funding costs of capital structure 2) Preferred typically is more expensive than debt and less than equity; in terms of valuation, treat it like debt, subtracting it out of TEV to arrive at equity. Throw in value of any converts or warrants for all-in return... Read More
1) Yes, include kp because it is part of funding costs of capital structure 2) Preferred typically is more expensive than debt and less than equity; in terms of valuation, treat it like debt, subtracting it out of TEV to arrive at equity. Throw in value of any converts or warrants for all-in return... Read More
Re: Relationship between P/E and inverse of P/E (2 questions)
1a) Inverse of PE is indeed Earnings Yield. It is NOT cost of equity because cost of equity is typically derived from CAPM whereas PE and Earnings Yield can be thought of as a "market-driven" or "market-demanded" cost of equity. Therefore it WOULD be appropriate to say that Earnings Yield is essenti... Read More
1a) Inverse of PE is indeed Earnings Yield. It is NOT cost of equity because cost of equity is typically derived from CAPM whereas PE and Earnings Yield can be thought of as a "market-driven" or "market-demanded" cost of equity. Therefore it WOULD be appropriate to say that Earnings Yield is essenti... Read More
Re: Adjustments for non-recurring items to calculate adjusted EV/FCFF or other cashflow ratios
In theory, ALL one-time adjustments made on the IS should also flow through to the BS and CF. However this is not practical nor necessary to always implement. Since we are mostly trying to spread our TEV valuation multiples, we just need to focus on Revenue EBITDA, EBIT, Net Income. The major impact... Read More
In theory, ALL one-time adjustments made on the IS should also flow through to the BS and CF. However this is not practical nor necessary to always implement. Since we are mostly trying to spread our TEV valuation multiples, we just need to focus on Revenue EBITDA, EBIT, Net Income. The major impact... Read More
Re: Tax shield effect
Yes we agree with this assessment. Devil's in the details of course as one would have to actually model out the impact to confirm. The increase in cost of equity would come from a higher beta, offset by lower cost of debt and changing the weights. If your WACC template is set up, this should be auto... Read More
Yes we agree with this assessment. Devil's in the details of course as one would have to actually model out the impact to confirm. The increase in cost of equity would come from a higher beta, offset by lower cost of debt and changing the weights. If your WACC template is set up, this should be auto... Read More
Re: Projection of FX translation
1) Project as normal as explained in the WMT portion of the Segment build-up class. Then calculate the impact of the EUR move (make sure to apply against proper revenue amount that is affected, not the entire revenue or international revenue base) and then whether that is a plus or minus contributio... Read More
1) Project as normal as explained in the WMT portion of the Segment build-up class. Then calculate the impact of the EUR move (make sure to apply against proper revenue amount that is affected, not the entire revenue or international revenue base) and then whether that is a plus or minus contributio... Read More
Re: gordon growth number
1) Yes, because your model explicitly implicitly includes the impact of inflation (see your other post), the growth rate used for Gordon Growth should be compared against GDP NOMINAL 2) Not sure "if yes, add inflation". If yes, that would be double counting inflation, no? 3) Yes, per previous ... Read More
1) Yes, because your model explicitly implicitly includes the impact of inflation (see your other post), the growth rate used for Gordon Growth should be compared against GDP NOMINAL 2) Not sure "if yes, add inflation". If yes, that would be double counting inflation, no? 3) Yes, per previous ... Read More
Re: including inflation in the model
1) Inflation assumptions are typically INCLUDED as part of your drivers for revenue and expenses. For revenue, if you're applying the fundamental logic of Price * Volume (or Price * Quantity), that Price already includes the impact of both price increases as well as inflation. The same applies for e... Read More
1) Inflation assumptions are typically INCLUDED as part of your drivers for revenue and expenses. For revenue, if you're applying the fundamental logic of Price * Volume (or Price * Quantity), that Price already includes the impact of both price increases as well as inflation. The same applies for e... Read More
In cases like this, always go with mgmt figures. There are a gazillion reasons why tax basis changes!