1 VISUAL ANALYSIS of Sales,
Earnings and Price
Back View of Stock Selection Chart
Enlarged Individual Sections on Back View of Stock
Selection Guide
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2 EVALUATING
MANAGEMENT
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Company: Stryker Corp, Q4FY2007c (SYK4C)
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03/16/08
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3 PRICE-EARNINGS HISTORY as
an indicator of the future
This shows how stock prices
have fluctuated with earnings and dividends. It is a building block for
translating earnings into future stock prices.
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PRESENT PRICE: 60.780
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HIGH THIS YEAR: 76.890
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LOW THIS YEAR: 54.900
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4 EVALUATING RISK and REWARD
over the next 5 years PEG=165
Assuming one recession and
one business boom every 5 years, calculations are made of
how high and how low the stock might sell. The upside-down ratio is key
to evaluating
risk and reward.
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5 5-YEAR POTENTIAL
This combines price
appreciation with dividend yield to get an estimate of total return.
It provides a standard for comparing income and growth stocks.
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Benchmarks for
Interpreting an SSG on Stryker, Inc.
The statements on
this form are suggested benchmarks to use in interpreting an SSG for
Stryker. The numbers (e.g., number 1, number 2...) correspond with
those on
the Stryker SSG.
Section 1
Capitalization
- Percent Insiders: The higher the
percentage, the better.
- Percent Institution: Investors prefer no
more than 40-50%.
Visual Analysis
- Percentage Change for
Sales and Earnings per Share: Investors like to see at least a 10% change in
both Sales and Earnings from the year ago quarter.
Estimated Future Sales Growth and Estimated Future Earnings Per
Share Growth
- Investors like to see 15% growth. May
vary depending on size of company.
Back to 1
Section 2
Evaluating Management
- 2A—Percent
Pre-tax Profit on Sales: Investors like to see this growing at 10-15%
or better.
Check the industry's average (www.reuters.com)
to know if this is reasonable.
- 2B—Percent Earned
on Equity: Investors like to see this growing at 15-20% or better.
Check the industry's average (www.reuters.com)
to know if this is reasonable.
Back to 2
Section 3
Price Earnings History
- #8 Average Price
Earnings Ratio: Want to buy at or below the 5 year average P/E ratio.
Back to 3
Section 4
Evaluating Risk and Reward over the next 5 years
- D—Upside Downside
Ratio:
Need a 3 to 1 ratio to double money in 5 years.
- E—Price Target: Need 100%
appreciation to double money in 5 years.
- Relative Value: Look for a relative
value between 80 and 110%.
Back to 4
Section 5
Five—Year Potential
- Estimated Average
Annual Return over Next Five Years: Need 20% to double
money in 5
years.
- Total Return: Need a Projected Annual Return of
15% to double money in five years.
Back to 5
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