corporate profits – Hidden Gems and Red Flags in the Stock Market

Tag Archives: corporate profits

Western Digital Corp (WDC) – free report for Ask Matt, Very Attractive Rating

November 19, 2010 – 11:40 am

HIDDEN GEM: Our detailed valuation model shows that WDC grew its “economic” profits by 226% while accounting profits grew 194% during its last fiscal year. Economic profits rose by $769mm while accounting profits rose by $912mm.

Wall Street’s Secret Plans To Continue Raiding the Capital Markets

October 27, 2010 – 1:05 pm

In another excellent expose “Wall Street Proprietary Trading Under Cover”, Michael Lewis exposes Wall Street’s plan to exploit loopholes in the laws and regs to continue proprietary trading, the activity that was the primary downfall of Bear Stearns and Lehman Brothers.

By David Trainer | Posted in Decoding Propaganda, Financial Reg Reform, General Market Comments | Also tagged regulatory reform, speculation, transparency, Wall Street | Comments (0)

Stock Pick of the Week: Sell/Short FedEx Corp (FDX)

August 24, 2010 – 8:30 am

RED FLAG: The main driver of the difference between Economic and Accounting earnings is FDX’s $11.9bn of off-balance sheet debt, a big number compared to $19.7bn in Net Assets and $25.6bn of market value.

By David Trainer | Posted in Stock Picks and Pans | Also tagged discounted cash flow model, downside risk, earnings, economic earnings, Financial Footnotes, Free Archive, free cash flow, NOPAT MARGIN, reward, risk, ROIC | Comments (0)

Sandridge Energy (SD) – Free Report, for Ask Matt Readers, Highlighting a Major Red Flag in the Footnotes

August 19, 2010 – 2:10 pm

Here is our free report on Sandridge Energy for Ask Matt readers. Our analysis of the Financial Footnotes reveals a major RED FLAG: the company has written off over $3.4bn in assets in just the last two years.

By David Trainer | Posted in Stock Picks and Pans | Also tagged cash flow, Dangerous, downside risk, economic earnings, Financial Footnotes, footnotes, red flag, value, write-off | Comments (0)

Stock Pick of the Week: Buy International Business Machines (IBM)

August 17, 2010 – 8:42 am

HIDDEN GEM: Our detailed valuation model shows that IBM grew its “economic” profits more than it accounting profits during its last fiscal year. Economic profits rose by $1.15bn while accounting profits rose by $1.09bn.

By David Trainer | Posted in Stock Picks and Pans | Also tagged accounting, buy, cash flow, downside risk, dynamic discounted cash flow model, earnings, economic earnings, free cash flow, GAP, Invested Capital, Invested Capital Turns, NOPAT, NOPAT MARGIN, ROIC, stocks, upside potential, valuation | Comments (1)

Economic Versus Accounting Earnings

August 5, 2010 – 8:35 am

Accounting data was not designed for equity investors, but for debt investors. “Earnings, earnings per share and earnings growth are misleading measures of corporate performance.”(from page 66 in The Quest For Value by Bennett Stewart, Harper Collins 1991.)

By David Trainer | Posted in Decoding Propaganda, Investing 101 | Also tagged accounting earnings, cash flow, dynamic discounted cash flow model, earnings, economic earnings, footnotes, GAAP, Invested Capital, NOPAT, propaganda, transparency | Comments (37)

Stock Pick of the Week: Sell/Short Yahoo (YHOO)

August 3, 2010 – 9:05 am

Overall, the Risk/Reward of investing in Yahoo’s stock looks Very Dangerous to me. There is lots of downside risk given the Misleading Earnings and there is little upside reward given the already-rich expectations embedded in the stock price.

By David Trainer | Posted in Stock Picks and Pans | Also tagged cash flow, downside risk, dynamic discounted cash flow model, earnings, expecations, GAAP, Invested Capital, investing, investment decision, investment strategy, risk, upside potential, valuation | Comments (1)

Stock Pick of the Week: Buy Xilinx (XLNX)

July 27, 2010 – 2:31 pm

HIDDEN GEM: Our detailed valuation model shows that XLNX grew its “economic” profits by nearly $14mm during its last fiscal year while it reported an $18mm decline in accounting profits.

By David Trainer | Posted in Stock Picks and Pans | Also tagged buy, cash flow, discounted cash flow model, downside risk, expecations, reward, risk, ROIC, upside potential | Comments (0)

New Constructs Receives Patent on Research System

July 22, 2010 – 2:30 pm

The United States Patent and Trademark Office awarded us patent #7,752,090, titled: System and Method For Reversing Accounting Distortions and Calculating A True Value of a Business.

By David Trainer | Posted in Stock Picks and Pans | Also tagged 10-K filing, cash flow, diligence, Financial Footnotes, footnotes, Invested Capital, NOPAT, Notes to the Financial Statements, parse, Proof Is In Performance, ROIC, Wall Street | Comments (2)

Greatest Hits: New Constructs media highlights

July 19, 2010 – 11:43 am

New Constructs has a strong reputation on Wall Street and with individual investors. We have been recognized for our analytical rigor (options, hidden debt, write-offs, red flags) as well as the stock-picking benefits of our hard work and analysis.

By David Trainer | Posted in Proof Is In Performance, Stock Picks and Pans | Also tagged Barron's, CNBC, diligence, finance, financials, footnotes, Forbes, investing, investment strategy, MarketWatch, red flags, risk, stocks, valuation | Comments (2)

Stock Pick of the Week
Sell Apple (AAPL)
Apple's 270% return on invested capital (ROIC) is not sustainable. With no groundbreaking innovation on the horizon, Apple's ROIC, and its stock price, should decline to a level closer to its competitors.
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From New Constructs

Proof Is In Performance: Jan 2005 - Mar 2013
	Since Inception	2013 YTD
Most Attractive	80%	5%
Most Dangerous	-42%	-8%
Most Attractive/Dangerous	56%	-3%
S&P 500	32%	6%

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