….This report presented essential “fundamentals at a glance” illustrating the past and present valuation based on earnings achievements as reported. Future forecasts for earnings growth are based on the consensus of leading analysts. Although, with just a quick glance you can know a lot about the company, it’s imperative that the reader conducts their own due diligence in order to validate whether the consensus estimates seem reasonable or not.
ResMed (RMD) represents a classic example of the earnings and price long-term correlation and relationship. When reviewing the historical graph, we discover numerous periods where the price disconnects from the orange earnings justified valuation line. However, we also discover that each time this occurs that price inevitably reverts to the mean by moving back to intrinsic value (the orange line). Currently ResMed appears to be fairly valued based on consensus forecasts, and modestly undervalued based on historical norms. Consequently, Resmed appears to be an attractive candidate for investors seeking above-average growth at a reasonable price.
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More