ronn38 asked the following question in the thread on LMT located here. No one replied to it and it piqued my interest so I thought I'd break it out in a separate thread and see if we can get some discussion on it.
And I'll add my answer here.
Ron, I think a big help would be sharing what you are seeing here, pro and con. Perhaps enough data points would turn on a light bulb for someone. Not everyone's looking for the same characteristics.
Using the LMT example where you first posted this, I used the S&P stock sheet and get an average P/E of 12.7 for the last 10 years. According to the stats on TDA's 'Fundamentals' page (and I don't know where the data comes from), LMT has only grown revenues and EPS at less than a 5% clip for the last 5 years. However, the dividend has grown over 22% annually for those same 5 years.
I don't know what F.A.S.T.Graphs says since I'm not a subscriber. Using Mr. Carnevale's logic, a 15 P/E may have been an appropriate benchmark.
Over the last 5 years we've also faced a recession, the winding down of 2 wars, and a debt ceiling/budget/sequestration see-saw on capitol hill. That really added clouds to that company's future profitability.
So what did we miss? I imagine a lot. I thought it was a value at around 100 but it just kept going up. I'm just throwing these out there as points that readily come to mind and don't want to limit it to just an LMT discussion.
I hope others add their opinions in answer to Ron's more general question.
(10-14-2013, 12:52 PM)ronn38 Wrote: Of course, no challenge or "line in the sand" is meant here, but rather how are we thinking different about these opportunities (and how might our thinking help each other better assess "value)?"
And I'll add my answer here.
Ron, I think a big help would be sharing what you are seeing here, pro and con. Perhaps enough data points would turn on a light bulb for someone. Not everyone's looking for the same characteristics.
Using the LMT example where you first posted this, I used the S&P stock sheet and get an average P/E of 12.7 for the last 10 years. According to the stats on TDA's 'Fundamentals' page (and I don't know where the data comes from), LMT has only grown revenues and EPS at less than a 5% clip for the last 5 years. However, the dividend has grown over 22% annually for those same 5 years.
I don't know what F.A.S.T.Graphs says since I'm not a subscriber. Using Mr. Carnevale's logic, a 15 P/E may have been an appropriate benchmark.
Over the last 5 years we've also faced a recession, the winding down of 2 wars, and a debt ceiling/budget/sequestration see-saw on capitol hill. That really added clouds to that company's future profitability.
So what did we miss? I imagine a lot. I thought it was a value at around 100 but it just kept going up. I'm just throwing these out there as points that readily come to mind and don't want to limit it to just an LMT discussion.
I hope others add their opinions in answer to Ron's more general question.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan