I’m sure I’m doing this wrong. Can someone please let me know what?
KMX (CarMax) Fiscal Year Ended Feb 28, 2015
2015 Net Earnings: $597.4M (aka trailing earnings?)
2014 Net Earnings: $492.6M
Today’s stock price: $71.70
PE: 597/71.7 = 8.3
Earnings Growth: 597 - 492 = 105
Rate of Earnings Growth: 105/492 = 21%
1YPEG: 8.3/21 = 0.39
Thanks for the feedback… Bob
Hello Rob,
The E in PE is earnings per share. take your earnings; divide by number of shares and divide the answer into the price.
Best regards,
Mike
Hi Bob,
I’m kind of a novice at this as well, so somebody else might want to double check my work. But first thing is you need to put everything in per share. A raw earnings number doesn’t mean much, we own shares, so each dollar earned is spread out across all the shares. In general, use “diluted” shares for a more accurate picture. Saul recommends using non-GAAP numbers for a variety of reasons, if you want to dig into this, theirs a wealth of information in the FAQ/Knowledgebase. That being said, I find the Carmax financial reports particularly difficult to decipher, so I’ll use the numbers they reported, I assume they’re GAAP, but I have trouble deriving non-GAAP numbers from their reports. Anyway:
2013 EPS 2.16
2014 EPS 2.67
Growth = (Cur Yr EPS-Last Yr EPS)/Last yr EPS = (2.67-2.16)/2.16 = 23.6%
Today’s closing price = $71.70
PE = Price per share/Earnings per share = 71.70/2.67 = 26.9
1YPEG = PE/growth = 26.9/23.6 = 1.14
Hope this helps (hope it’s right as well)
Thanks, it’s starting to make more sense.
Nice explanation, Brittlerock.
Your numbers are the same ones I came up with for KMX.
Jim