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Accounting Is Fishy at the Zumiez (ZUMZ) Surf Shop

Tuesday, March 29th, 2011 Accounting Is Fishy at the Zumiez (ZUMZ) Surf Shop

2010 earnings for the retail apparel sector have been quite strong, especially compared to 2009. However, looking behind the window dressing of reported earnings, we find that not all earnings are made the same. Zumiez Inc. (ZUMZ), retailer of cool, new action apparel turned to an old accounting trick to boost its 2010 earnings by 13%

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Dead Company Walking: Sell Eastman Kodak (EK)

Tuesday, March 22nd, 2011 Dead Company Walking: Sell Eastman Kodak (EK)

What I bet very few people, outside the company itself, know is that EK’s pension liabilities could torpedo the company into bankruptcy and send the stock to significantly lower levels. In the company’s recently published 10K, we found that EK’s pension obligations are underfunded by $2.6 billion, about 3 times the company’s market value.

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Back Up the Truck: Intel Is Too Cheap To Pass Up…Again

Tuesday, March 15th, 2011 Back Up the Truck: Intel Is Too Cheap To Pass Up…Again

Recent weakness in Intel (INTC)’s stock presents an excellent buying opportunity for investors. As one of March’s most attractive, INTC offers the rare combination of strong cash flow growth with a remarkably cheap valuation.

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For Ask Matt readers:Caterpillar Inc. (CAT) — Dangerous Rating

Wednesday, March 9th, 2011 For Ask Matt readers:Caterpillar Inc. (CAT) — Dangerous Rating

Caterpillar Inc. (CAT) gets our Dan­ger­ous Rat­ing. This means CAT’s quality-of-earnings are not attractive and the stock’s valuation it very expensive.

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Bleeding Reserves To Artificially Boost EPS: Sell Principal Financial Group, Inc. (PFG)

Tuesday, March 8th, 2011 Bleeding Reserves To Artificially Boost EPS: Sell Principal Financial Group, Inc. (PFG)

Principal Financial Group, Inc. (PFG) reported accounting earnings in 2010 that are misleading compared to the true economic earnings of the business. PFG’s 2010 reported earnings are artificially boosted by a reduced loan loss expense, which is funded by a draw down of the company’s loss reserves.

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Red Flag Report: Hidden Expenses/Income: What You Don’t Know Can Cost You

Tuesday, March 1st, 2011 dreamstimefree_3430_keepOutBuoyInSmallPond

Most investors are not aware that companies hide one-time and unusual charges and income inside normal, operating line items (e.g. “Cost of sales”) on their income statement. These hidden items can mislead investors by artificially decreasing/increasing GAAP earnings. We found 13,000+ one-time items buried in normal line items like “Cost of Sales” by studying the Footnotes of 10-K filings from 1998 thru 2/15/2011. This research revealed that companies have concealed over $41 billion in one-time items.

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Score A Takedown and Buy World Wrestling Entertainment, Inc. (WWE) – Very Attractive Rating

Tuesday, March 1st, 2011 Score A Takedown and Buy World Wrestling Entertainment, Inc. (WWE) – Very Attractive Rating

Don’t be fooled by the histrionics and high-flying stunts. World Wrestling Entertainment is an excellent business. With a return on invested capital over 22%, it is one of the most profitable companies in the United States. Excess cash is $207mm, more than 20% of the company’s market value.

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