How can you make a decent model of a public company with such little information available?
The amount of publicly available information is garbage. Where do you get adequate information to properly make models? I am coming from a PE background where you have endless data rooms of every possible minutiae you could wrap your head around.
IMO there is already too much information out there. Your job is to understand what the story of a company is and filter through data points to find ones that validate or invalidate that story. It's not about modeling everything perfectly, though I imagine that is important in PE. You could spend hours building some insane debt schedule and find that the company can buy back more shares than the street is modeling, leading to 2% EPS accretion. But does that really matter? Probably not. But let's say you find out that same company is a margin story and you find data points that support modeling GM's 20bps higher than street, leading to the same 2% accretion. That will matter much more, and the move in the stock price will be higher.
I've covered a couple of sectors, and generalizing a little bit here, usually organic growth upside > margin upside > capital return upside
That's fascinating, why is that, all else equal?
Thanks for the response!
Never really gave it much thought, but would assume its the sustainability of each line item. Capital returns are least relevant because it doesn't change the value of a business if you are thinking about EV as a whole. Margins seen as less sustainable since you can't cost cut forever (margins can't be >100%, top line can grow infinitely). Guessing organic growth most important given it's most sustainable and growing quickly solves most other problems.
How do you go about identifying what that driver is? Is it unique to the industry or does that come with following the company for awhile and seeing what moves the stock?
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