November 18, 2010 – 12:25 pm
Today we initiated coverage of ETFs for all major sectors and Indices. Free samples of the initiation reports are here. These reports deliver strategic insights into entire sectors and markets.
October 28, 2010 – 9:30 am
The second report in our Red Flag series focuses on a little-known earnings Windfall in the Paper and Products Industry. This report is another example of the deep analysis New Constructs performs on all 3000+ companies under coverage. Our expertise is in navigating poor and confusing disclosure in the Financial Footnotes to find the truth about corporate profitability and valuation.
September 7, 2010 – 9:06 am
The Risk/Reward of investing in Capital One’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.
RED FLAGS:
1. Misleading Earnings: COF reported a $399mm increase in GAAP earnings while our model shows economic earnings declined by $1,783mm.
2. The company’s ROIC is in the Bottom Quintile of all the companies we cover.
3. Stock price of $40.69 implies COF must grow its NOPAT at 15% compounded annually for 15 years.
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
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Posted in Stock Picks and Pans
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Also tagged accounting, buy, cash flow, corporate profits, downside risk, dynamic discounted cash flow model, earnings, economic earnings, free cash flow, GAP, Invested Capital Turns, NOPAT, NOPAT MARGIN, ROIC, stocks, upside potential, valuation
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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
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Posted in Decoding Propaganda, Investing 101
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Also tagged accounting earnings, cash flow, corporate profits, dynamic discounted cash flow model, earnings, economic earnings, footnotes, GAAP, NOPAT, propaganda, transparency
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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
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Posted in Stock Picks and Pans
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Also tagged cash flow, corporate profits, downside risk, dynamic discounted cash flow model, earnings, expecations, GAAP, investing, investment decision, investment strategy, risk, upside potential, valuation
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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
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Posted in Stock Picks and Pans
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Also tagged 10-K filing, cash flow, corporate profits, diligence, Financial Footnotes, footnotes, NOPAT, Notes to the Financial Statements, parse, Proof Is In Performance, ROIC, Wall Street
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One of the Most Dangerous Stocks for July, Whole Foods has misleading earnings and a sky-high valuation, in our opinion. The same is true for all of our Most Dangerous Stocks.
By David Trainer
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Posted in Stock Picks and Pans
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Also tagged Competitive Advantage Period, discounted cash flow model, earnings, EVA, free cash flow, Growth Appreciation Period, Invested Capital Turns, NOPAT, NOPAT MARGIN, return on invested capital, ROIC, WACC, Weighted Average Cost of Capital
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Hidden Gem – GPS: economic earnings are rising faster than reported accounting earnings b/c the company lowered the capital employed to run the business. GAAP earnings do not capture increase capital efficiency of the business.
By David Trainer
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Posted in Stock Picks and Pans
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Also tagged assets, cash flow, corporate profits, downside risk, earnings, expecations, finance, Free Archive, GAAP, Invested Capital Turns, investing, investment strategy, NOPAT, NOPAT MARGIN, reward, risk, ROIC, stocks, upside potential, valuation, Wall Street
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If you are interested in learning how to uncover the truth about the profitability and valuation of stocks, the first… Read more >>
By David Trainer
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Posted in Investing 101
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Also tagged assets, cash flow, database, diligence, discounted cash flow model, earnings, finance, GAAP, NOPAT, NOPAT MARGIN, Proof Is In Performance, propaganda
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