+- Dividend Growth Forum (http://DividendGrowthForum.com)
+-- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=15)
+--- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=33)
+--- Thread: Valuation metrics (/showthread.php?tid=465)
Valuation metrics - Concasto - 03-29-2014
Hey guys, I am putting together a list of metrics for filtering out stocks and I have some questions.
1. Why should we use p/e over p/cfo (cash flow from operations). It seems to be cfo is more accurate in terms of the companies ability to take in cash(assuming accounts receivable/payable isn't way out of whack). This would put REITs and pipelines who have a lot of non-cash items taken away from their net income and the KOs and JNJs of the world on a more even footing.
2. This leads me to my next question. Neither net income or cfo account for cap ex. I understand some cap ex is "growth" cap ex, but at least some is required to maintain earning at current levels. For example the costs of a mining company to acquire new land and new equipment might be required to maintain its current profits, so while they may make $X this year, it might cost them $X to buy land to mine for next year, netting then $0. I feel this maintenance should be subtracted from profits. Is there any way to correctly capture this? Or am I looking at this the wrong way?
My idea is to setup something excel and use VBA to extract the info I need from morningstar's financial data. Anyone tried this with any success?