Warren Buffett Value Investing Cheat Sheet – A handy check-list I compiled

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by Shanemonksobyrne

Below is a handy check-list for valuing investing the old-school Warren Buffett way. I thought you might find it useful.

All the stats are derived from Buffett’s advice over the years through shareholder letters and other sources. In my opinion, it is nearly impossible for a company to tick all of these boxes in the current market, but they are useful guidelines.

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Anything else you guys would add to the list? What other metrics / checks do you use?

  • Debt/Equity < 0.5
  • Current Ratio > 1.5 && < 2.5
  • Price/Book < 1.5
  • ROE > 8% consistent/increasing over last 10 yrs
  • ROA > 6%
  • Stable Book Value growth
  • Stable EPS growth
  • Stable Dividend growth
  • Moat
  • Interest coverage ratio (Income from operations/Interest expense) > 5X operating income
  • Inventory turnover ratio (Cost of Revenue/Inventory) > 4
  • Free-cash-flow-to-revenue ({Operating cash flow + property, plant & equipment} / Revenue) > 5%
  • P/E Ratio < 15
  • S&P rating > BB
  • Reasonable Margin of safety (DCF intrinsic value/current price)

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