Earnings power value upside, explained

What is Earnings power value upside?

What the company would be worth if its profits never grew again, compared with today's price. Positive means the price is below that no-growth value.

If today's profit, held flat for ever, is worth ₹900 a share and the price is ₹750, the upside is +20%. Any growth comes free.

If you pay less than the no-growth value, any future growth comes free.

Positive is cheaper. It assumes today's profits can be kept up.

Higher is usually better.

A great company can still be a poor buy at the wrong price. These compare the price with profits, sales, cash and the company's own history.

26 lessons

Operating profit ÷ enterprise value, as a percentage. It's the P/E turned upside down, with debt counted.

The yearly sales growth the market is betting on at today's price.

Where EV / sales ranks among sector peers: 0 is the cheapest, 100 the most expensive.

Today's P/E compared with the company's usual P/E over the last 5 years. Negative means cheaper than usual.

Enterprise value ÷ free cash flow, the cash left after the company pays to maintain and grow its assets.

Today's P/E compared with the company's usual P/E over 10 years. Negative means cheaper than usual.

Enterprise value ÷ yearly sales. Like price / sales, but it counts debt and cash too.

Today's P/B compared with the company's usual P/B over 5 years. Negative means cheaper than usual.