Back test of Modal Compound Equation by the 26 years Growth in NVR (NYSE).

.

In 1994, Norbert Lou managed $60,000 of his mother retirement money, nearly all of her investible funds at the time.

.

In 1997, he invested in NVR (NYSE) ( ≈ $ 22 per share).

.

Fast forward 26 years to 2023 from 1997, the stock price is ≈ $ 7,000 with CAGR 16.6732613328%.

.

The return is ≈ 320 x, or 32,000 %, if he hasn't sold his mother's NVR (NYSE) stocks.

.

Stock: NVR (NYSE)

.

Terms: 26 years

.

A.

Number of shares (1997)

= 11,83,9,000

.

Number of shares (2023)

= 3,238,161

.

Note:

Share buy back occurs between 1997-2023.

.

B.

:: 1997 ::

.

Net income

= 28,879,000

.

Number of shares (1997)

= 11,839,000

.

EPS

= 28,879,000÷11,839,000

= $ 2.4393107526

.

Stock Price Pentry@ 31.12.1997

= $ 21.88

.

Pentry/EPSentry

= 21.88÷2.4393107526

= 8.9697468749

.

SBB Ratio per year is

= (3,238,161÷11,839,000)^(1÷26)-1

= -0.0486386232

= equivalent to SBB per year CAGR 4.86386232% for 26 years

.

C.

:: 2023 ::

.

Net income

= 1,591,611,000

.

Number of shares (2023)

= 3,238,161

.

EPSexit

= 1,591,611,000÷3,238,161

= $ 491.5169443397

.

Stock Exit Price, Pexit@ 29.12.2023

= $ 7000.45

.

Pexit/Eexit

= 7,000.45÷491.5169443397

= 14.2425405281

.

D.

Net Income 2023

= $ 1,591,611,000

.

Net Income 1997

= $ 28,879,000

.

Net_Profit_CAGR (1997-2023, 26 years)

= 100×((1,591,611,000÷28,879,000)^(1÷26)−1)

= 16.6732613328 %

.

Modal Compound Multiple at 26th Years

=

Pexit/Eexit ÷ Pentry/Eentry

×

[

(1 + Net Profit_Cagr_ratio) ÷ (1 - SBB_ratio)

]^number_of_years

=

14.2425405281÷8.9697468749

×

[

(1+0.166732613328)÷(1−0.0486386232)

]^26

= 319.94744096034 baggers

.

Pexit

= Stock Entry Price × Modal Compound Multiple at 26th Years

= 21.88 × 319.94744096034

= $ 7000.45

.

E.

Conclusion:

.

The Stock's Modal Compound Equation

::

Pexit/Eexit ÷ Pentry/Eentry

×

[

(1 + Net Profit_Cagr_ratio) ÷ (1 - SBB_ratio)

]^number_of_years

::

is ✅, it has done its job.