Finding The Edge
Financial Analysis is breaking down the financial report and make interpretations from it – honestly, this is the most boring activity in investing (but we promise you, you won’t see boring posts under this category here). But the investor has no choice. Analyzing financial reports make investor get closer to valuation.
Four mantras in investing are: Find durable business, find a business with a high return on invested capital, Don’t pay too much, verify periodically.
That’s it.
Our first post’s category is Competitive Advantage – it deals with the first mantra: Finding durable business. This – Financial Analysis category – deals with the second: Finding companies with a high return on invested capital.
Our article under financial analysis parent will cover earnings in detail. It will cover the business model, segment contribution, and how could it grow (or not) in the next foreseeable future. Our earning analysis will be incorporated with Cash Flow Analysis as justification of that earnings. In some cases, earning is just a record – not materialized in cash, and we don’t like that.
Moreover, We will also cover the balance sheet since it provides us insight into the management track record, financial resilience against bad circumstances, management stewardship, and company strategy.
We hope our financial analysis will provide a storyline of a company – you don’t see it as a number. It beyond the number, the financial report, year by year, will provide a history of the company – how good the strategy is, how many bad decisions made, how management treats shareholders.
Even with pandemics linger the world, Visa could still record growth for its number of transactions processed. In Fiscal Year 2020, Visa recorded more than 140 B transactions – up 2% from the previous period. Here, We try to understand the Business Model of Visa, How the card company makes money.
Continue reading “Business Model of Visa: The Magic Card”
In the Fiscal Year 2020, Nvidia’s “AI business” resumed its astronomic growth, revenue from the data-center segment spiked more than double (124%) from the previous period (from ~3B to 6.6 B). In our Nvidia earning analysis, we try to understand what is behind that impressive leap.
Continue reading “Nvidia Earning Analysis: From Chip to System”
Regarding its rising number of subscribers, Disney said that its streaming business does very well, even topping all the most optimistic estimations. In this analysis of the Disney Income Statement, we try to neutralize that euphoria.
Continue reading “Analysis of Disney Income Statement: Inside the Magic”
According to its Annual Report for Full Year 2020, Visa has 16B in cash, more than double the 2019 number with 7B. Why is The Card Giant piling so much cash? And Where did the money come from? Here we try to conduct a Balance Sheet Analysis of VISA.
Continue reading “Balance Sheet Analysis of VISA: Pledge for Plaid”
Our IBM income analysis begins with the declining trend of its Intellectual Property business. In the last 6 years, this “segment” decline more than 60% – a little bit ironic for the firm that is always at the top of the patent recipient in the world every year.
Continue reading “IBM Income Analysis. Blue Turn Red”
The Big Five1 use their retained earnings as growth fuel. Starbucks doesn’t follow this blueprint, so we question, “Is Starbucks a good stock to buy?”
Continue reading “Is Starbucks a good stock to buy? Management”Adobe stuns us with an 86% gross profit margin – exceeding even Apple, Amazon, Microsoft, and Google. Yet, in a contrast, its operating margin only at a 29% level. In 2019, The creator of Illustrator generates a 9.5 B gross profit margin but only 3.27 B converted as operating margin. The largest cost of software maker is not its software making or research. What does it mean for shareholders? We try to track this financial ratio layer by layer, from revenue to earning, from production to marketing strategy.
Continue reading “Financial Ratio Analysis: What Adobe Gross Profit Margin Tell Investor?”