Compounder Index at Rational Price (CARP) Investing Replaces Growth at Reasonable Price (GARP)

Compounder Index at Rational Price (CARP) Investing Replaces Growth at Reasonable Price (GARP).

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PECompounder_Index of CARP replaces PEG of GARP.

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PECompounder_Index

= Market P/E ÷ Compounder Index

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PEG

= Market P/E ÷ Net Profit Growth

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Compounder Index

= ROIC, ROA, √(ROIC × ROA) or √{ ROIC × ROA × (Gnet_profit Factor)² ÷ (Ginvested_capital Factor × Gtotal_asset Factor) }

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Ultimate Intrinsic Earnings Compounder Index Value

= EPS × ROIC

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Ultimate Intrinsic Compounder Index P/E

= ROIC

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ROA Earnings Compounder Index Value

= EPS × ROA

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Earnings Composite Compounder Index Value

= EPS × √(ROIC × ROA)

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Forward Earnings Composite Compounder Index Value

(Assuming the same Net Profit Growth Momentum will persist in the following year)

= EPS × √{ ROIC × ROA × (Gnet_profit Factor)² ÷ (Ginvested_capital Factor × Gtotal_asset Factor) }

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MOS Bargain emerged when “Market P/E < Compounder Index” emerged.

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Which Compounder Index do Superinvestors favor?

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Warren Buffett, Charlie Munger, Joel Greenblatt and LiLu favor the ROIC as the Compounder Index that lives in the inner core of a business.

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Peter Lynch favors the Net Profit Growth (Gnp) as the Compounder Index that lives in the inner core of a business.

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Henry Singleton favors the ROA as the Compounder Index that lives in the inner core of a business.