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Great questions T Muscat,

EPS is the most manipulated number in investing, so we do not use it. Besides that, Yahoo information is notoriously inaccurate and outdated, so those might explain the odd numbers on their part. Firms can make EPS it do and say whatever they want because accounting standards are so flexible. The best way to guard against this type of manipulation is to do a cash flow valuation approach, which we show in the "Cash Flow (DCF)" and "Buffett Calc." analysis. In fact, the cash flow approach is the same way Warren Buffett does his analysis.

If you want to use the EPS comparative method, then a normal EPS is 12. If you take $4.44 times 12, then you get a price of 53.28 dollars per share. If you take $2.44 times 12, you get a price of 29.28, which is much closer to our number.

Stocks are nearly certain (9 out of 10) to hit the suggested stock price, because stock prices swing up and down all the time. The timing of of these swings is big issue, because it could take days or years. Let's take TEVA Pharma for example. The current price is roughly $60 dollars per share. Our suggested price using three very sophisticated valuation approaches is $23 dollars. The potential of this company is negative 60%, so over time, the stock price will likely fall back to the suggested price. If the company does much better than expected, the suggest price will increase over time, but I would rather sell an overvalued company like TEVA and buy an undervalued company like Astrazeneca. This is how you invest: "buy low, sell high." ;-)

If you would like to experiment with our analysis, just find the "Experiment" link on top of the page for each analysis. We want our visitors to trust the analysis, so we allow them to experiment with our work and understand the level of quality we put in to each analysis.

Write back if you have any other questions.

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