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Author: job3rd Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 14982  
Subject: Re: OT: Question for Mungo Date: 12/6/2012 4:30 PM
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"Fit a regression line through the earnings per share."

In Excel, is this =LINEST(known y's) ?

"..and measure the R-squared quality of fit.
The better the fit, the steadier the earnings."

In Excel, is this =RSQ (.. ) ?

"- Some sane constant to set a cap. 10-12-15% maybe?"

In Excel, is this =SMALL(bvg5, eps5, projEPS, max 15%??
(i.e. SMALL(C4, D4, E4; >= 15, 15 ???)

"This sort of pure-quant analysis would be good
for finding candidates, but a lot more examination
would be in order. Sometimes a firm with
preternaturally smooth earnings is actually a risky firm."

I planned on narrowing the list first by low debt,
consistent/above ave ROE, etc. Then, run remaining
through some acct'g ratios such as
Cash Flow from Financing/ Ave Tot Assets,
Bal Sheet Accrual Ratio
Total Assets/Total Accruals

So, you would recommend doing the pure-quant
future EPS estimate AFTER I've narrowed the
list to 50-60 quality firms?

Thanks again Jim!

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