How Do You All Make Revenue Forcasts?

[BadBoyBenny]

Adios,

Typically management will publish their own forecasts you can use that information, combined with their past history of meeting, exceeding, or not meeting their forecasts as a guide. Berkshire is a tough example because it is so diverse and complex in it's sum that it would be damn near impossible to do it by looking at individual businesses. I doubt Buffet gives revenue forecasts anyway, his targets would probably deal with equity value or retained earings, not revenue. not only will this type of estimate be provded, but the 10-k will often list specific risks that mangement thinks could impact their ability to meet their estimates. Each person reading the 10-k could discount these risks differently.

Also, market pessimism may not necessarily be related to next years revenue, but instead people could mean that the market as a whole is too optimistic/pessimistic about long term trends, or extraordinary items like potential litigation.

As far as whether an individual security is undervalued, it may be that the person making the statement agrees with the market on revenue and cash flow estimates, but believes the compan yshould be worth a higher ratio to these amounts than they are.

Disclaimer -- I have no idea whether I would personally consider the stocks provided as undervalued or overvalued.