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The Value Way πŸ’Έ


πŸ’Έ Value Investing Principles πŸ“£ Quotes πŸ’° Investing 🌟 Inspiration πŸ’‘ Financial Terms πŸ“ˆ Analysis πŸ“© If you want tips to grow your page organicly DM us!

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Dividend Signaling - Follow @thevalueway πŸ” - Because the dividend signaling theory has been treated skeptically by analysts and investors, there has been regular testing of the theory. On the whole, studies indicate that dividend signaling does occur. Increases in a company's dividend payout generally forecast positive future performance of the company's stock while, conversely, decreases in dividend payouts tend to accurately portend negative future performance by the company.  The dividend signaling theory suggests that companies paying the highest level of dividends are, or should be, more profitable than otherwise identical companies paying smaller dividends. This concept indicates that the signaling theory can be disputed if an investor examines how extensively current dividends act as predictors of future earnings. Earlier studies, conducted from 1973 to 1978, concluded that a firm’s dividends are basically unrelated to the earnings that follow. However, a study in 1987 concluded that analysts typically correct earnings forecasts as a response to unexpected changes in dividend payouts, and these corrections are a rational response. #investing #stockmarket #nyse #dividendstocks #dividend
The importance of Free Cash Flow πŸ’ͺ - Follow @thevalueway πŸ” - Cash Flow from Operations shows how much cash is generated from the day-to-day operations. This figure can then be used to deduct the “capital expenditure” (under “Acquisition of property, plant and equipment” of Cash Flow from Investing Activities) that the company undertakes. Capital expenditure is usually used by a company to acquire or upgrade physical assets such as machineries, furnishings, buildings, or equipment. The resulting figure, obtained by subtracting capital expenditure from Cash Flow from Operations, is called the “free cash flow”. Free cash flow is essential in any business as it allows the company to reinvest the cash, make acquisitions, pay dividends, buy back shares, and pare down debt. Without any free cash flow, the business has to borrow money from banks, undertake private placements or issue rights to its shareholders to sustain its business. #benjamingraham #warrenbuffet #cash #stockmarket #wallstreet
Reasons a Company Might Suspend Its Dividend 🚫 - Follow @thevalueway πŸ” - Dividend distributions can be a little complicated because there are two types of stock that a company can issue. Most stock is considered common stock, and dividends are issued at the discretion of the issuing entity. However, many companies also issue preferred shares that do not carry the same ownership rights as common stock but do provide a guaranteed dividend amount each year, which is typically higher than the dividend received by common shareholders.  To issue dividends to common shareholders, the company must first pay back any dividends due to preferred shareholders. In some cases, a company may have the funds necessary to pay a common dividend but not to pay both preferred and common dividends. In this case, a company may choose to pay preferred dividends but suspend common dividends or decide to suspend all dividends entirely.  However, any preferred dividends that are deferred must be paid before any common dividends can be distributed. In this case, common dividends may be suspended indefinitely so the company can afford to pay preferred shareholders. Companies that have to suspend preferred dividends fight an uphill battle against ever-increasing overdue payments in subsequent years, so this is not a popular choice unless the company is in serious trouble. #investing #peterlynch #dividend #company #stockmarket
Reasons a Company Might Suspend Its Dividend 🚫 - Follow @thevalueway πŸ” - Dividends are issued out of a company's retained earnings, which represents the total amount of profit accumulated over time that has not been previously distributed as dividends in prior years or otherwise used up. Outside of dividend payments, one of the primary uses for retained earnings is to fund growth projects that, while temporarily costly, promise to provide increased income in the future. If a company decides the time is right to open a new location, expand its product line or reach out to a new market segment, it may dip into its retained earnings to fund the growth. In this case, dividends may be suspended temporarily to facilitate increased earnings. Again, shareholders who dump a stock that suspends dividends to fund growth may be missing out on accelerated capital gains and increased dividends in future years. #investorlife #longterminvestment #richmind #investing #warrenbuffet
Reasons a Company Might Suspends Dividends 🚫 - Follow @thevalueway πŸ” Follow @thevalueway πŸ” - Another reason a company may suspend its dividends is due to unexpected one-time expenses that temporarily reduce profits. Even if revenues remain constant year to year, a lawsuit judgment against the company or the need to replace or update costly equipment may require the company to use its earnings for other purposes. In these scenarios, dividends are generally reinstated as soon as the unexpected expense is satisfied. Shareholders that jump ship at the first sign of trouble may be sacrificing future dividends and capital gains because they failed to research the cause behind the suspension. Not all dividend suspensions are cause for shareholder panic. #donaldtrump #dividend #dividendstocks #investingtips #warrenbuffet
Free Cash Flow - Follow @thevalueway πŸ” - FCF measures the level of cash available to a company's investors net of all required investments in working capital and fixed capital, including plant, property and equipment, otherwise known as capital expenditures, plus any expenses required to remain a going concern. FCF is an important measure because it allows a company to pursue opportunities that enhance shareholder value. Excess cash can expand production, develop new products, make acquisitions, pay dividends and reduce debt.  As FCF increases, balance sheet strength and health rises; however, it is important to note that negative FCF is not a bad indicator. If FCF is negative, it could be a sign a company is making significant investments. If these investments earn high returns, the strategy has the potential to add value in the long run. #investments #richmind #valueinvesting #cashflowquadrant #nasdaq
Reasons a company suspends its dividend 🚫 - Follow @thevalueway πŸ” - Financial trouble: The chief cause of a dividend suspension is the issuing company is under financial strain. Because dividends are issued to shareholders out of a company's retained earnings, a company that is struggling may choose to suspend dividend payments to safeguard its financial reserves for future expenses. If revenue is down or costs are up, the amount of money left over for dividends at the end of the year may be minimal or nonexistent. Sometimes, dividend suspensions may be announced out of necessity, meaning there is no profit to distribute, or out of proactive financial planning, meaning profit margins are not large enough to warrant any nonessential spending. #warrenbuffet #berkshirehathaway #richmind #stocks
Preferred Stock - Follow @thevalueway πŸ” - A preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights.  Preferred stock combines features of debt, in that it pays fixed dividends, and equity, in that it has the potential to appreciate in price. The details of each preferred stock depend on the issue.  If a company liquidates, a line of outstretched hands forms to collect the proceeds. At the head of the line is the Internal Revenue Service to collect any back taxes and the trustees charged with carrying out the liquidation. Next come the creditors and employees, followed by the preferred shareholders and finally the holders of common stock. #stockmarkets #peterlynch #bankruptcy #preferredstock #liquidation
Working Capital πŸ’΅ - Follow @thevalueway πŸ” - Working capital, also known as net working capital, is the difference between a company’s current assets, like cash, accounts receivable (customers’ unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, like accounts payable.  Working Capital = Current Assets - Current Liabilities #richmind #investingtips #stockmarkets #berkshirehathaway  #charliemunger
Why having a mentor is important πŸ‘₯ - Follow @thevalueway πŸ” - If you examine any successful person they typically have one thing in common: a mentor. Nearly every successful person in history had someone who they could confide in and learn from when times were tough. This article will highlight the importance of having a mentor in business and entrepreneurship.  To be successful in life it is very important to have a mentor, a coach, someone with more experience than you, someone who is in a position in life that you desire to be in the future.  Most people underestimate the value of a mentor and this is the biggest reasons for failure in business. A mentor offers valuable insight to things that only experience can teach as well as a host of other things. They have fruit on their tree which shows they have paid the price to be in a position to offer wisdom to you if you need it.  The following points will put into perspective the importance of having a good mentor and the peace of mind that comes with knowing you have someone in your corner that is knowledgeable about your enterprise or business. And believe you, if you don't have one yet you better find one before you need one. #mentor #investor #warrenbuffet #richmind
Why Investing is better than starting a company yourself πŸ‘‡ - Follow @thevalueway πŸ” - When I first started my little company, one very old, very successful and very wise entrepreneur told me I should "buy stock in a company you like in a business you're interested in" instead of going into business for myself. I asked him why. He replied, "because that's what I would've done if I had it to do over again… it would've saved me millions of headaches". My point is, you're no less an entrepreneur investing than you are starting up your own company; if, you develop the right investment philosophy.  Which is a significant point - owning your own business comes with certain drawbacks  incredible amounts of effort unlike anything you've experienced in most jobs, very lean times in the beginning in terms of cash flow and no guarantee of success at any point along the way. Plus, a competitor can rise up and take over your market in a heartbeat - as many bricks-and-mortar market leaders are learning today. The set of advantages are usually what draws people to hang out a shingle of their own - control over one's own destiny, doing something you believe in, the challenge of making it on your own and looking back at your accomplishments from a higher point down the road and, of course, the chance to make a million… maybe.  The most important part of this equation is the ability to "pick and stick" with a winner. The idea of trading in and out of stocks that have a bad day is NOT an investment philosophy, even though you might make a few gains in the margins with each trade. ~Arik Johnson #stocks #investor #valueinvesting #bullmarket #richmind #grind #succes #entreperneur #entrepreneurship
Leverage πŸ’‰πŸ’° - Follow @thevalueway Follow @thevalueway - Leverage results from using borrowed capital as a funding source when investing to expand the firm's asset base and generate returns on risk capital. Leverage is an investment strategy of using borrowed money  specifically, the use of various financial instruments or borrowed capital to increase the potential return of an investment. Leverage can also refer to the amount of debt a firm uses to finance assets. When one refers to a company, property or investment as "highly leveraged," it means that item has more debt than equity. #stocks #investor #valueinvesting #bullmarket #richmind #grind #succes #entreperneur #entrepreneurship
Convertible Bond πŸ’± - Follow @thevalueway πŸ” Follow @thevalueway πŸ” - As the name implies, convertible bonds give the holder the option to exchange the bond for a predetermined number of shares in the issuing company. When first issued, they act just like regular corporate bonds, albeit with a slightly lower interest rate.  Because convertibles can be changed into stock and thus benefit from a rise in the price of the underlying stock, companies offer lower yields on convertibles. If the stock performs poorly, there is no conversion and an investor is stuck with the bond's sub-par return (below what a non-convertible corporate bond would get). As always, there is a tradeoff between risk and return. #stocks #investor #valueinvesting #bullmarket #richmind #grind #succes #entreperneur #entrepreneurship
Median house price 🏠 - Follow @thevalueway πŸ” - The median house price is the midway point of all the houses/units sold at market price (or sold amount) over a set period (monthly, yearly, quarterly, etc.). That is, if there were 101 houses sold during the month, the median house price would be the house price in the middle i.e., that has 50 house prices above it and 50 house prices below it. #stocks #investor #valueinvesting #bullmarket #richmind #grind #succes #entreperneur #entrepreneurship
Junior Issue πŸ‘Ά - Follow @thevalueway πŸ” Follow @thevalueway πŸ” - A corporate security that ranks lower in claim to another corporate security in terms of dividends, interest or principal repayment if the company goes out of business. Junior issues can be in the form of debt or equity. A junior issue is the opposite of a senior issue, which has priority if a company liquidates. #stocks #investor #valueinvesting #bullmarket #richmind #grind #succes #entreperneur #entrepreneurship
Income Bond πŸ’΅ - Follow @thevalueway πŸ” Follow @thevalueway πŸ” - A bond in which the issuer is only responsible for making coupon payments when it has sufficient income to do so. Income bonds are most common in reorganization plans in which the issuer is attempting to maintain operations in bankruptcy. An income bond is useful for the issuer because it provides capital quickly. However, it can be disadvantageous for the bondholder because there is little or no guarantee of repayment. As a result, income bonds are relatively rare securities. #nyse #stocks #investor #bullmarket #valueinvesting
Dilution - Follow @thevalueway πŸ” Follow @thevalueway πŸ” - Dilution is a result of a reduction in the ownership percentage of a company, or shares of stock, due to the issuance of new equity shares by the company. Dilution can also occur when holders of stock options, such as company employees, or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each existing stockholder owns a smaller, or diluted, percentage of the company, making each share less valuable. #investing #wallstreet #nasdaq #valueinvesting #warrenbuffet
Fixed-Charge Coverage Ratio - Follow @thevalueway πŸ” Follow @thevalueway πŸ” - The fixed-charge coverage ratio measures a firm's ability to satisfy fixed charges, such as interest expense and lease expense. Because leases are a fixed charge, the calculation for determining a company's ability to cover fixed charges includes earnings before interest and taxes (EBIT), interest expense, lease expense and other fixed charges. The fixed-charge coverage ratio is calculated as: (EBIT + lease payments) / (lease payments + interest). - An FCCR equal to 2 (=2) means that the company can pay for its fixed charges two times over. - An FCCR equal to 1 (=1) means that the company is just able to pay for its annual fixed charges. - An FCCR less than 1 (