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New Special Red Flag Report on Off-Balance Sheet Debt

Wednesday, October 20th, 2010

In a special article on Red Flags, Barron’s featured New Constructs’ unique ability to unearth red flags buried deep in corporate filings to help investors make smarter decisions.

We have published many Red Flag reports that highlight the deep analysis we have performed on over 50,000 10-Ks.

The first in our latest series of reports on Red Flags and Hidden Gems is Red Flag Report on Off-Balance Sheet Debt (request access to this report via research@newconstructs.com). This report delivers:

  1. Measurement of the impact of the operating lease accounting loophole on the entire stock market and all 3000 companies we cover.
  2. Explanation of exactly how the off-balance sheet debt from operating leases affect economic earnings.

In addition to the free report provided at the link above, we offer a Premium version (request access to this report via research@newconstructs.com) with specific details on the amount of off-balance sheet debt from operating leases on the top 100 companies with the most off-balance sheet debt.

As detailed in the report, we plan to publish similar reports on all the Red Flags and accounting loopholes we address as part of our effort to deliver clients the whole truth about the profitability and valuation of companies. Current clients of New Constructs have access to the off-balance sheet debt stats for each of the 3000+ companies we cover.

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3 Comments

  1. varadha says:

    Terrific, yet simple analysis. I’ve always been a fan of ROIC as a measure of capital efficiency and believe that no size/growth outperformance can replace the quest for efficiency.

    Sort of like a big gas guzzling v8 that needs ever increasing gallons of fuel to keep its engine running

  2. David says:

    But Angie’s $90 per user acquisition cost is going to go away. That’s what their approach probably is. How would their outlook be if that $90 cost dropped down to a total cost of $3 per user?

  3. David:

    That would be great, but cost per user acquisition is not something that’s very easy for a company to fix. ANGI can slash their marketing budget to the bone, but then they would stop acquiring new members. They would probably lose members in fact, as their membership renewal rate is at ~75% and declining. If they cut marketing expense by ~95% as you seem to be suggesting, ANGI might be able to eke out 1 year of slight profits, but they would start shedding members and losing money very quickly. ANGI’s only hope is to keep its marketing budget high and hope it can reach the scale and brand awareness to be able to sustain its business while scaling back marketing costs enough to turn a profit. The fact that ANGI’s revenue growth is slowing down even as its marketing costs keep increasing makes it very unlikely it will achieve that goal.

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