Understand how the company earns
Study products, customers, competitive advantages, industry position and the factors that drive revenue and margins. Avoid relying on a single growth number.
Follow cash, debt and capital allocation
Compare reported profit with cash generation, review leverage and working capital, and consider how management reinvests, acquires, pays dividends or raises capital.
Test valuation with scenarios
Valuation reflects expectations about growth, risk and returns. Use more than one scenario and recognise that a good company and a good purchase price are different questions.