New Constructs Models: Results- Decision

14 Jul 2014 · 2 min

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Tour of New Constructs' Decision page, which shows what growth and profit margins a stock price requires. For GM, the model shows you need 6% annual revenue growth and 0.5% earnings margins over 11 years to justify a $40 share price. You can test different scenarios by selecting them and regenerating the model.

Chapters

Welcome to the New Constructs tutorial for accessing and interpreting the decision page of our company models. The decision page is the default page under the results tab. Here you can view our expectations analysis of the current stock price. All of our company models are populated with the default forecast based on consensus revenue growth estimates. The growth, profitability, and duration of growth required to justify the current stock price is presented within the performance hurdles table. In this example, under the default forecast scenario, GM would have to grow revenue by 6% compounded annually with an economic earnings margin of 0.5% for the next 11 years to justify their almost $40 stock price. The historical performance of the company is also presented to the left of the forecast scenarios. At New Constructs, our goal is to present you with the relevant data in order to make a prudent investment decision. You can then decide if the expectations are below, in line, or higher than your own. The chart below the performance hurdles plots implied stock prices for multiple durations, or growth appreciation periods. You can also compare multiple forecast scenarios after creating your own. To view the tutorial for creating your own forecasts, click the link appearing on your screen. To compare multiple forecasts, click the scenario from the dropdown list and click Regenerate Model. Thanks for watching this tutorial. If you have any questions, please leave a comment.