Volume 1

See below for examples of value in McKesson (long).

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McKesson at $118 is undervalued by 35% in our analysis.  

The RoE chart above is used to normalize earnings which are estimated to be $8.41 in 2014.  Normalized earnings (MPEPS) are shown below vs actual earnings and dividends.

Using the normalized earnings, we calculate the history of relative Payback to the market, and, in McKesson's case, establish a normalized range of 90-130%.

Using this range we calculate the theoretical price range and compare that to the actual high low and close as shown here.

As mentioned, normalized earnings are $8.41 which gives a Reinvestment Return (growth) of 15.8%.   

Implied earnings (IEPS) and growth (ImRR). 

Reversing the process, we calculate the the stock is fairly priced if it earns normalized earnings of $7.12 and growth of 12.9%.