University Bancorp, Inc. GAVA: 0.0 ( as of Sep08)

Definition

A stock’s GAVA™ (pronounced like “lava”) is a measure of its intrinsic value. The GAVA™ (GuruFocus Automatic Value Appraisal) is calculated using a formula developed by GuruFocus and 4 pieces of public data:

• Earnings
• Dividends
• Past Growth
• Current Interest Rates

The GAVA™ also takes into account 3 special situations:

• Unsustainable growth
• Unprofitable growth
• Inadequate earnings

The GAVA™ calculation is fully automated. And never requires more than 7 inputs:

• Earnings
• Dividends
• Book Value
• Revenue Growth Rate
• EBITDA Growth Rate
• Book Value Growth Rate
• Stock Classification: Financial/Non-Financial

Every GAVA™ calculation uses 4 variables. The 3 additional inputs are only used to determine when special rules apply to a stock. Depending on which special rules apply to a stock, different metrics are used to calculate the stock’s GAVA™.
Unlike most measures of intrinsic value, the GAVA™ is equally applicable to holding companies, banks, railroads, retailers, and industrials.

The GAVA™ needs to be combined with a stock’s business predictability rating before you can use it to make a buy or sell decision. The more predictable a company is, the more accurate its GAVA™ will tend to be.

Finally, never buy a stock simply because its GAVA™ is higher than its current price. Only buy a stock when there is a sufficient margin of safety. GuruFocus - following in Ben Graham’s footsteps - recommends a margin of safety of 50%.
In other words, a stock’s GAVA™ should be at least 1.5 times its price for the stock to be a good buy.

GAVA = (E + D) * (7 + (G-B))

(Earnings) E equals…

FINANCIALS
The highest of:
• 10-Year Average Return on Equity * Book Value
• 10-Year Book Value Growth * Book Value
• Moody’s 30-Year AAA Bond Yield * Book Value

NON-FINANCIALS

The highest of:
• 10-Year Average Net Margin * Sales
• Moody’s 30-Year AAA Bond Yield * Book Value
(Dividends) D equals...
• Dividends per share
(Growth) G equals...
FINANCIALS
The lowest of:
• 10-Year Revenue Per Share Growth
• 10-Year Book Value Per Share Growth
• 20%
NON-FINANCIALS
The lowest of:
• 10-Year Revenue Per Share Growth
• 10-Year EBITDA Per Share Growth
• 20%
(Bond Yield) B equals...
• Moody’s 30-Year AAA Bond Yield