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The Coca-Cola Company Message Board

  • Rickson9 Rickson9 Apr 6, 1998 7:52 PM Flag

    http://www.ndsn.com/tic and intrinsic an

    It is important to note that if an intrinsic value
    analysis was done on a company 5 years ago by person1,
    and another one is done today by person2, they can't
    both be right. If the growth assumptions of person1
    doesn't yield a 5 year result similar to person2's
    then somebody's calculations will be in error.

    In addition, if person1 assumes 10 years of growth, then
    person2, by assuming another 10 years will make one
    person's calculations incorrect since with respect to
    person2, person1's assumptions will be 5 years too long.

    To correct this, you should take Hagstrom's calculations
    and compare with present values. If they are still valid,
    then a reanalysis is possible. If they are different, then
    the cause should be found.

    Also, Mr. Hagstrom assumes a 9% or greater discount rate
    during periods of low inflation. The use of a 6% discount
    rate today is absurd.

    It is also important to realize that if KO grows at it's
    current level it will take over 40 years to make back your
    investment. If it grows at twice it's current level, it'll
    take 20 years to make back your money - theoretically.

    PS:My new site has been updated with a brief review
    on GPS. It is located at target=new >http://www.ndsn.com/tic


    All visitors are very welcome. The follow up article
    to GPS will consist of an intrinsic value analysis.

    Cheers,
    Jim

 
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