Power Up Your Portfolio With Entergy Louisiana Bonds [View article]
I am surprised that you did not address this in your article but for a long-term yield investor (which is what you would be if you were looking for a 40-year bond) why not just buy the common stock?
The yield is almost identical, current dividend tax rates are better (if that matters) and you have the possibility of growing dividends.
I have been analyzing PFE for a while and have the following problem, perhaps you could weigh in here.
This analysis holds true for cash flows as well but let's talk about earnings to keep things simple.
1. Let's assume (like everyone else) that Lipitor goes off-patent at the end of 2011 and the impact of that is -$0.15 to EPS in 2012 and an additional -$0.10 in 2013 (so $0.25 over 2 years).
2. Assume that the rest of the PFE/Wyeth businesses grow EPS at 8% per year for 10 years.
3. What is the CAGR (compound annual growth rate) of EPS for the next 10 years under that scenario (Answer = ~3%)
4. What multiple of earnings would you pay for a 3% EPS growth rate for the next 10 years?
*That* is the billion dollar question.
Try a different tactic as well, assume a 8% CAGR on EPS (total including Lipitor drop-off) and then back-in to what the growth rate on the non-Lipitor business needs to be to get to that 8% level. (Hint: it's above 20% *per year*)
Let me be clear, I understand your thesis and I like the company but those numbers make me a bit uncomfortable. What do you think?
This is an interesting theoretical argument but (to the best of my knowledge - I am not an international lawyer) my understanding is that there is no legal mechanism to "eject" any of the members of the EMU. Which means that Greece leaving the EMU would necessitate some type of voluntarily withdrawal which, while not out of the realm of possibility, is not a high probability outcome.
Power Up Your Portfolio With Entergy Louisiana Bonds [View article]
The yield is almost identical, current dividend tax rates are better (if that matters) and you have the possibility of growing dividends.
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What do the OECD PPP or FEER/REER models imply for the USD/EUR exchange rate - ie: where do you think the Euro can drop to?
Pfizer for the Long Haul [View article]
I have been analyzing PFE for a while and have the following problem, perhaps you could weigh in here.
This analysis holds true for cash flows as well but let's talk about earnings to keep things simple.
1. Let's assume (like everyone else) that Lipitor goes off-patent at the end of 2011 and the impact of that is -$0.15 to EPS in 2012 and an additional -$0.10 in 2013 (so $0.25 over 2 years).
2. Assume that the rest of the PFE/Wyeth businesses grow EPS at 8% per year for 10 years.
3. What is the CAGR (compound annual growth rate) of EPS for the next 10 years under that scenario (Answer = ~3%)
4. What multiple of earnings would you pay for a 3% EPS growth rate for the next 10 years?
*That* is the billion dollar question.
Try a different tactic as well, assume a 8% CAGR on EPS (total including Lipitor drop-off) and then back-in to what the growth rate on the non-Lipitor business needs to be to get to that 8% level. (Hint: it's above 20% *per year*)
Let me be clear, I understand your thesis and I like the company but those numbers make me a bit uncomfortable. What do you think?
-NC
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