Hello Troy,
I can understand your initial questions and criticisms of the website.
For me personally the book did a lot more in explaining their concepts than the website. I read their original book and this subsequent edition long before I went to their website. That helped me as I moved around the website.
One thing about the default screen of having a 10 year excess return metric. In the book they go to great lengths to explain how this might be very excessive in a lot of companies that have strong competition in their industry. The website has this to say about that subject:
Default Inputs:
"We have certain inputs that we have given an initial value, and the investor may change to suit the company that's being analyzed. These include the company's Bond Spread to Treasury (1.5%) and Preferred Stock Yield (7.5%). If the stock of the company has a beta value, we look it up and use it. If no beta is available, we use a default value of 1.0.
We have estimated a constant Equity Risk Premium of 3.0%, a 10-Year Treasury Rate of 5.0%, and a 10-year Excess Return Period. Like all of the other inputs, these three items may be changed by the user. A 10-year Excess Return Period is a very long time for a company to keep a competitive advantage. For many companies, especially financial companies, a 5-year Excess Return Period may be more appropriate and certainly more conservative."
This website is only one tool....just like the Dividend Discount website.....and should be only one thing that is considered in the research.
Take care,
Ray
