Screen for High-Quality Business Models

Measuring senior management’s performance is essential for owning shares in great companies.

At a minimum, evaluate a business’s returns on management by analyzing and measuring revenue and earnings growth, profit margins, return on equity, return on invested capital, and owners’ earnings.

Remember to limit due diligence on a company’s fundamentals to its current financial position, rather than relying on unreliable predictive analysis or excessive business modeling.

Excerpted from the Chapter 9 of my upcoming fifth book, Quality Value Investing: Uncover Winning Stocks of Enduring Companies.

Read or listen to the manuscript on my author website, hosted by Substack.