A good thesis can be disproved.

Before opening a valuation model, write down what the business must do for your idea to work. Then write the evidence that would make you change your mind.

The one-page thesis

1. Business: Who pays the company, and why do customers return?
2. Economics: What remains after operating costs and the investment needed to maintain the business?
3. Expectation: What growth, margins and valuation appear necessary to justify today’s price?
4. Disagreement: What evidence supports your view that those expectations are too high or too low?
5. Disproof: Name three observable events that would invalidate your view.

“This is a great business” and “this is an attractive price” are separate claims. Test both.

A model is a map, not a destination.

Start with a range. If EPS is $10, assumed growth is 10% and exit P/E is 20×, the illustrative price is $220: $10 × 1.10 × 20. A lower 15× multiple produces $165 with the same earnings. Neither is a prediction.

Your next research task

Open the latest annual report. Find the cash flow statement, share-based compensation, diluted share count and debt maturity schedule. Record the source and date beside every number you use.

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