Since 2012, Berkshire (BRK.A)
has restricted buybacks to prices below 120 percent of the stock's book
value, which is an estimate of the company's value after liabilities
are subtracted from assets.
Given the company's massive cash pile of $120B+ , the rule change Remove 1.2 Times Book Value Restriction for share buybacks. It will not do so if it reduces its cash below $20 billion.
BRK has not done a good job deploying capital over last 3 years. A share buyback at $125 to $145 range over last 2-3 years would have been a good use of excess capital in the absence of any meaningful acquisitions.
Monday, July 23, 2018
GOOGL 2Q2018 Results Analysis - Revenue UP 26% Year Over Year
GOOGL Revenues up 26% Year Over Year to $26B (32.5B revenue - TAC 6.5B) and excluding currency gains organic growth in revenue was 23%. GOOGL expected revenue for 2018 will be > 100B. The current valuation is in range of $850B. So it is trading at 8 times revenue.
Profit will depend on operating margin which has been shrinking steadily over the years. GOOGL also has excess net cash balance of $120B+ which is $150+/share.
Excluding the fines EPS for the quarter would be $11.75. So on an annualized basis GOOGL is currently earning $50 EPS. So excluding cash ($150 per share) GOOGL can be considered as trading at 22 times Forward earnings [($1200-$150)/50].
If GOOGL can continue to grow top line at 24% per year over next 4 years to 2022 then revue will double and earnings will double if margins remain comparable. So an investor today at $1200 needs to hope for this to happen to start making 10% business return per year 4-5 years from today and hope the business is sustainable in the long run.
The economics on the shares purchase a year ago at $950 per share are 6.25% earnings yield currently if we exclude the $150/share cash and divide EPS $50 by share price $800.
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