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International Investing / Australia (All-Ordinaries)


Subject:  EPS Date:  8/18/2002  7:35 PM
Author:  harmy Number:  4865 of 6186

I thought this was very interesting particularly in view of our discussion on the relative merits of EPS forward earnings.

The real value of the EPS estimate is not in the estimate itself but in the changes in the estimates. Theoretically, when analysts increase the EPS estimate, investors expectations of future earnings increase and the value of the company [and thus its' stock price] increases. These reported changes in earnings estimates are the most consistent leading indicator of the direction in which a stock price is going to move. This is critical in evaluating and deciding whether or not to buy or sell stock.


PS Your spreadsheet gives a prediction of an 86% return for Ridley Corporation (as an example) but when using the method described in in your post 4834 I am unable to get this result. Am I missing something or is there a small step missed out ??

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