1. GuruFocus Tutorial (II) Value Idea Validationhttp://www.gurufocus.comCreated: Dec. 2009 Updated: May 2010

2. What Can GuruFocus Do For You?Stock Idea Generation see Tutorial I Guru Stock Picks and Holdings Insider Buys Value Investing Screeners Monthly Newsletters Ben Graham NCAV Letter Buffett-Munger Bargain Letter Stock Idea Validation This tutorial What Gurus are doing with the stock What Insiders are doing with the stock Valuation: Absolute valuation DCF Model Historical valuation 10-year P/E, P/B, P/S ratios Relative valuation Comparable companies Compare with related companiesCopyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 2 3. Executive Summary - Stock Idea ValidationsWhat Gurus are doing with the stockWhat insiders are doing with it 10-year financial history Valuations:Absolute valuation with DCF calculatorHistorical valuation history p/e, p/s, p/bRelative valuations: how other companies in the sameindustry are valued Peer opinions how others value this company Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 3 4. TAB 1 - Guru & Insider Trades & Ownership (I)Tab 1 Business Predictability Rank Recent quarter Guru Trades Earlier Guru Trades Premium Gurus trade doesnot show up, unless he/sheis in your personalized list. History Button to showholding history Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 4 5. TAB 1 - Guru Trades & Ownership (II)Guru currentownership (Real time picksupdated as it happens. Othersupdated quarterly) Premium Gurusholdings does notshow up, unlesshe/she is in yourpersonalized list Insider TradesCopyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 5 6. Holding History of Gurus Click on the history button to show the holding history of the gurus with this positionCopyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 6 7. TAB 2 10-Year Financial History (I) TAB 2: 10 year and 40 quarters of financial dataBalance sheetIncome statementCashflow statementPer share dataGraphic display of any data in the page, overlap multiple chartsEvery row can be clicked open to display in charts. Say next slideCopyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 7 8. TAB 2 10-Year Financial History (II) Every row of data can be clicked open to display a chart Like this Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 8 9. TAB 3 - Absolute Valuation DCF Calculator (I)TAB 3 Intrinsic value calculation withDiscounted cash flow model All parameters (eps, growth rate, discountrate, years to grow etc) can be adjusted atyour preferences, and the calculator updatesautomatically (See next slide for details) Margin of Safety is calculated automatically Default parameters like earning per share,growth rate, book value are from thefinancial data in TAB 2 Default Terminal Growth Rate is 4%, andDefault discount rate is 12% Financial data is give to help users set theparameters. Intrinsic values of related companies arecalculated automatically with the samegrowth rates and discount rate, but theirown earning per share. The respectiveMargin of Safety is given.Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 9 10. TAB 3 - Absolute Valuation DCF Calculator (II) In the example of JNJ Default Settings: Smaller Discount RateLess optimistic on growth Higher Terminal Growth From financial data: From financial data: From financial data: From financial data:Eps: $4.55 Eps: $4.55Eps: $4.55 Eps: $4.55Growth rate: 13.5% Growth rate: 13.5%Growth rate: 10% Growth rate: 13.5%Book value: $13.9Book value: $13.9 Book value: $13.9Book value: $13.9 Discount rate: 12% Discount rate: 10%Discount rate: 12% Discount rate: 12% Terminal growth rate: 4% Terminal growth rate: 4%Terminal growth rate: 4% Terminal growth rate: 6%Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 10 11. TAB 4 - Historical Valuation (I) TAB 4 - Historical p/e, p/s, p/b and dividend yield is displayed to compare current valuation with historical valuationsThe p/e, p/s and p/b ratios over the past 10 years are calculated to find out historical maximum and minimumsLines are drew at both the historical maximum p/e and the minimum p/e.Similar lines are drew for p/s, p/b ratios. Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 11 12. TAB 4 - Historical Valuation (II) Click on the legend, each of lines can be turned on/off. In the example at the right side, p/s and p/b lines are turned offHistorical maximum p/e (31) and minim p/e (12.3) lines are displayed. These two lines form a band of historical p/e ratio movement of JNJHistorical p/e lines are not horizontal straight lines because earnings are changingHistorical high p/e (p/e=31)Historical low p/e (p/e=12.3)In the case of JNJ, apparently it is at its low end p/e ratio as of todayCopyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 12 13. TAB 4 - Historical Valuation (III) A lot of times p/e is not a good indicator of stock value, as profit margin can vary over business cyclesIn this case, p/s and p/b can be good references of stock valuationsCopyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 13 14. TAB 4 - Historical Valuation (IV) A two-chart mode can beenabled by clicking the tablower In this example, historicalp/s ratio is displayed Quarterly sales aredisplayed here Two-chart mode can havemany combinations. Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 14 15. TAB 5 Compare: Relative Guru Trades & ValuationTAB5 - Compare withcompetitors on GuruTrades and marketvaluations Compare companieswith similar valuationmatrix Type in anycombination ofsymbols to comparewith other companiesCopyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 15 16. TAB 6 Fair Value VotesTAB 6 Fair valuevotes of otherusers You can ask otherusers why theyvoted for the value Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 16 17. Premium MembershipPremium Members ($249/year) have fullaccess to the all the features described inthis presentation. 7-day Free Trial The Secured link for signing up:https://www.gurufocus.com/membership/upgrade.php Copyright: GuruFocus.com, LLC. GuruFocus.com stock picks and market insight of Warren Buffett Gurus 17