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12/08/2009

Enterprise value below 200 million:: Discounted to normalized earnings

Some of the criteria was as follows

1) Enterprise value < 200 million

2) Share count over the prior trailing 12 months being less than the average 5 year annual count.

3)Calculated average annualized prior 5 year free cash flow (04- 08) as a percentage of the current enterprise value and then compare this yield to the yield using the prior 12 months of operating income as a percentage of the current enterprise value.
My goal was to select only those companies selling for a lower earnings yield using the current operating income/enterprise value versus the yield calculated by the average 5 year FCF/EV. The thought was to find stocks that may be temporarily trading at a discount to normalized earnings.

4) Cash flow from operation >0 over the past 12 months.

5) Company share buybacks over 2008 and YTD 2009.

6) Return on invested capital (ROIC) > the annualized return of 20% over the past 5 years.

Please click to review the results