LDK Solar's Management Is Creating Value

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"I think I've been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I've underestimated it," Warren Buffett's business partner, Charlie Munger, once said. "And never a year passes but I get some surprise that pushes my limit a little farther."

For corporate boards, using bad incentives for management pay can be disastrous. (Think Lehman Brothers.) Incentives based on singular metrics such as revenue growth, EBITDA, return on equity, or earnings per share are easily manipulated and gamed. Fortunately, EVA momentum provides a better alternative.

Creator Bennett Stewart of EVA Dimensions, who also co-created EVA (Economic Value Added), calls EVA momentum "the only percent metric where more is always better than less. It always increases when managers do things that make economic sense."

So what does this mean for investors? A positive reading on EVA momentum means a company has created value by increasing its EVA, and a negative EVA momentum means EVA has decreased and less value is being created. EVA momentum is one of the few performance measurements, if not the only one, with such a clear dividing line between good and bad performance.

The best companies, then, create value in excess of their cost of capital, as reflected by positive EVA momentum. The higher the EVA momentum, the faster management is creating value.

Let's look at LDK Solar (NYSE: LDK  ) and three of its peers to see how effectively they create value. Here are the trailing four quarters' worth of EVA momentum figures for each company over the past three years, along with rankings by percentile versus the Russell 3000 for the past 12 months' EVA momentum.

Source: EVA Dimensions LLC.

With an EVA momentum of 38.5%, LDK Solar's economic value added increased year over year, placing it in the 95th percentile of all companies in the Russell 3000. All of the three remaining companies also had positive EVA momentum over the past 12 months.

Businesses with high EVA momentum are effectively creating value. It will be interesting to see how useful this extremely new metric proves to be for companies and investors. If it lives up to its promise, it will be an essential tool in investors' arsenals.

Another tool for better investing
Most investors don't keep tabs on their companies' fundamental value. That's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock-tracking service.

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Source: http://feeds.fool.com/~r/usmf/foolwatch/~3/24d27YqvUTA/ldk-solars-management-is-creating-value.aspx

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This Mad Scientist's Genetically Engineered "Bugs" Could Solve The World's Biggest Problems


Sean Simpson

Turning waste into energy, Kiwi entrepreneur and scientist Sean Simpson is a modern alchemist.

He's the founder of an Auckland, New Zealand-based company called LanzaTech.

With long red hair and a quick, loud laugh, he's a mad scientist for the good guys.

Simpson says that with the help of tiny, genetically-engineered "bugs," LanzaTech can take industrial waste and turn it into usable fuel.

And while alchemy has always been something of a myth, LanzaTech's process is already up and running.

Right now, it's converting exhaust into ethanol at a steel mill outside Auckland.

Simpson's first ambition is to export this process to China, where half the world's steel is made and half the world's steel is consumed.

His second, much loftier, goal is to create new bugs that will be able to convert the world's most ubiquitous greenhouse gas, CO2, into something more useful.

Let's not kid around: If Simpson can do that, he'll be solving one of the world's biggest problems.

To help achieve those missions, Simpson has raised a sack full of cash from Silicon Valley legend, Vinod Khosla.

He's raising another round right now, too. He wants LanzaTech to be the rare multi-billion dollar tech firm based out of New Zealand.

During out recent trip down under, we stopped by LanzaTech to meet Simpson and his bugs.

Welcome to New Zealand. Its far away, but its seaports and airports give it direct access to China

LanzaTech is based in the office of a defunded government agency

One of its neighbors is RocketLab, which rumored to be building handheld surveillance rockets for the US department of defense

See the rest of the story at Business Insider

Please follow SAI on Twitter and Facebook.

See Also:

Source: http://feedproxy.google.com/~r/businessinsider/~3/TMYKizSP8QA/this-mad-scientists-genetically-engineered-bugs-could-solve-the-worlds-biggest-problems-2011-7

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Christian Financial Counseling Programs

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Debt and financial problems don't discriminate; there are people of all walks of life and colors that are experiencing hardships. There is currently over $800 million in credit card debt, the average household is carrying around a burden of $14k in credit card debt, and those that are in real trouble have 2 xs to 5x that much, and are looking for help. People gravitate towards other people of similar interests, and it's no secret that most consumers do business with people that we know and trust, so it's no surprise that Christians turn to Christians for personal and...

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Perrelet Goes Diving With New Seacraft Watches


Perrelet Seacraft Watches Hands-On

Perrelet Seacraft watch 2 Perrelet Seacraft Watches Hands On

At Basel 2011 I was surprised to see these new dive watches from Perrelet. The brand has recently focused a lot on formal and sport so I should have expected a good diver, however, I never saw these coming. The Seacraft collection is interesting and appealing though parts of the designs seem to be influenced from elsewhere. My biggest question is how much Perrelet paid SeaCraft boats to use the name? Personally, I don't think about boats when I hear the name, I actually think about Star Craft.

There are three watches in the Seacraft collection and each comes with three different dial colors (black, white, or blue). A nice matching alligator strap option is also available for each of the watches. The colors are bold and so are the styles. I like the pieces overall but feel that Perrelet possibly could have gone further to make the watches more distinct. Plus, aside from the lugs and Perrelet logo on the dial, there isn't much about the watches that says "Perrelet."

Despite these facts, the Seacraft timepieces have a lot to love about them. The case reminds me a lot of my Glashutte Original Sport Evolution watch in terms of sizes and lugs. Perrelet took a very direct cue from the Sport Evolution with the bracelet. As with the GO, you press the Perrelet logo to extend or close the clasp by a few millimeters. The system pretty much works the same as the Sport Evolution, too. While not original, it is a great feature to have and ups the value of the bracelet for me. Similar to the Omega Seamaster Planet Ocean, this watch is mostly brushed steel with just a few polished elements. The case design is attractive and well done. The detailing is impressive and I like how all the pieces fit together.

Read the rest of the story here...

Please follow The Life on Twitter and Facebook.

Join the conversation about this story »

Source: http://feedproxy.google.com/~r/businessinsider/~3/g0t1PngpIio/perrelet-goes-diving-with-new-seacraft-watches-2011-7

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What Are Your Options If You File For Bankruptcy?

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With the current financial climate being so gloomy, many people are getting further into personal debt. If you are struggling to cope with your debts, you are not alone! You may have considered filing for bankruptcy. It's made to sound really easy by companies who sell bankruptcy solutions. You'll be able to start afresh, and all your personal debt will be gone.

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Source: http://ezinearticles.com/6413640

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When Is the Right Time To File Bankruptcy?

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Many people wonder how to determine the best time for file for bankruptcy. There are many factors to consider before filing. Knowing how to examine your financial situation, review all of your options and make an informed decision is the first step to financial freedom.

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Source: http://ezinearticles.com/6418716

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Is MetLife's Stock Cheap?

Numbers can lie -- yet they're the best first step in determining whether a stock is a buy. In this series, we use some carefully chosen metrics to size up a stock's true value based on the following clues:

  • The current price multiples.
  • The consistency of past earnings and cash flow.
  • The amount of growth we can expect.

Let's see what those numbers can tell us about how expensive or cheap MetLife (NYSE: MET  ) might be.

The current price multiples
First, we'll look at most investors' favorite metric: the price-to-earnings ratio. It divides the company's share price by its earnings per share (EPS). The lower the P/E, the better.

Then we'll take things up a notch with a more advanced metric: enterprise value to unlevered free cash flow. This tool divides the company's enterprise value (basically, its market cap plus its debt, minus its cash) by its unlevered free cash flow (its free cash flow, adding back the interest payments on its debt). As with the P/E, the lower this number is, the better.

Analysts argue about which is more important -- earnings or cash flow. Who cares? A good buy ideally has low multiples on both.

MetLife has a P/E ratio of 15.8 and an EV/FCF ratio of 12.0 over the trailing 12 months. If we stretch and compare current valuations with the five-year averages for earnings and free cash flow, we see that MetLife has a P/E ratio of 16.0 and a five-year EV/FCF ratio of 12.3.

A positive one-year ratio of less than 10 for both metrics is ideal. For a five-year metric, less than 20 is ideal.

MetLife has a mixed performance in hitting the ideal targets, but let's see how it stacks up against some of its competitors and industry mates. 

Source: Capital IQ, a division of Standard & Poor's; NM = not meaningful.

Numerically, we've seen how MetLife's valuation rates on both an absolute and relative basis. Next, let's examine ?

The consistency of past earnings and cash flow
An ideal company will be consistently strong in its earnings and cash-flow generation.

In the past five years, MetLife's net income margin has ranged from -2.0% to 13.2%. In that same time frame, unlevered free cash flow margin has ranged from 14.2% to 25.9%.

How do those figures compare with those of the company's peers? See for yourself:

anImage

Source: Capital IQ, a division of Standard & Poor's; margin ranges are combined.

In addition, over the past five years, MetLife has tallied up four years of positive earnings and five years of positive free cash flow.

Next, let's figure out ?

How much growth we can expect
Analysts tend to comically overstate their five-year growth estimates. If you accept them at face value, you will overpay for stocks. But even though you should definitely take the analysts' prognostications with a grain of salt, they can still provide a useful starting point when compared with similar numbers from a company's closest rivals.

Let's start by seeing what this company's done over the past five years. In that time period, MetLife has put up past EPS growth rates of -5.5%. Meanwhile, Wall Street's analysts expect future growth rates of 10.6%.

Here's how MetLife compares with its peers for trailing five-year growth:

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Source: Capital IQ, a division of Standard & Poor's; EPS growth shown.

And here's how it measures up with regard to the growth analysts expect over the next five years:

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Source: Capital IQ, a division of Standard & Poor's; estimates for EPS growth.

The bottom line
The pile of numbers we've plowed through has shown us the price multiples that shares of MetLife are trading at, the volatility of its operational performance, and what kind of growth profile it has -- both on an absolute and a relative basis.

The more consistent a company's performance has been and the more growth we can expect, the more we should be willing to pay. We've gone well beyond looking at a 15.8 P/E ratio, and although we see some reasonable numbers, we also see some recent growth difficulties and some better numbers in its peer set. But the initial numbers can be deceiving, and Met Life could be cheaper than it looks. If you find MetLife's numbers or story compelling, don't stop here. Continue your due-diligence process until you?re confident one way or the other. As a start, add it to My Watchlist to find all of our Foolish analysis.

See the stocks that I've researched beyond the initial numbers and bought in my public real-money portfolio.

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Source: http://feeds.fool.com/~r/usmf/foolwatch/~3/wlGxCwgJT20/is-metlifes-stock-cheap.aspx

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The Pros and Cons of Credit Counseling

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The Labor Department just reported a 3rd straight month of an increase in the unemployment rate, which as of July 8th, 2011 is at 9.2%. That has some economist, and consumers concerned and predicting that we're still not out of our economic slump. Credit counseling has grown in popularity over the course of the past 10 years, and is becoming increasingly popular as an alternative to bankruptcy and other hard core debt solutions like debt settlement. There are some considerations before you enroll in any credit counseling program and you should consider some of the following before you go into credit counseling.

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Source: http://ezinearticles.com/6411096

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