No. of Recommendations: 17
Hi Eddie. I think the only really difficult part of my analysis is determining which ratios send the strongest signals. If you go to Yahoo! Finance's homepage for any stock, you'll see a tab for "historical data". Go there, adjust the date range to your liking, and click "download data". Boom! There's the start of the first tab in your spreadsheet. You're right on target with sources for the second tab: earnings press releases on the IR website and SEC filings.

Yes, I use "adjusted earnings" and "non-GAAP earnings" pretty interchangeably. The potentially worrisome issue is that there's no standard definition of how to adjust GAAP, so choices of what to adjust differ from company to company. However, most companies (if not all) will present a "reconciliation" so you can see what is being added and removed. With experience, you can decide whether the adjustments are being made to present the business more accurately, or more generously. Having faith that management is acting in your best interests is important in investing, and how they adjust earnings is one clue to their integrity.

That's a solid definition of EV. Some people short-cut it by omitting preferred equity and minority interest (which usually works, because the omitted items are infrequently present). You can find all of the inputs you'll need in the 10-K or 10-Q, except for the "market value"-oriented ones. If you can get good market value data for debt and preferred equity elsewhere, great. If not, I'll just use the information from the balance sheet and call it good for a quarter -- they're usually not such a significant component of EV anyway. For market value of common stock, I'm trying to ascertain the number of outstanding shares at the point in time of the end of the reporting period, and then use that and the stock price to calculate market value.

I don't want to put words in Phoolio18's or Saul's mouths, but I think you've identified a key learning to be gleaned from this board. My suggestion would be to study Saul's monthly reports (and the occasional interim update), where he often explains why he made the changes he made. Look for common themes and patterns. When you have solid questions, ask Saul! I know there are several participants on this board who are executing very Saul-like strategies successfully, so it can be done if it is within your temperament to do so. My temperament is such that I can't mimic what Saul does and sleep at night. But that doesn't mean that I can't study and learn and improve my returns by adding Saul-like strategies within my comfort level.

I hope this response was helpful. For a self-proclaimed newbie, I think you're definitely on the right track!


Fool on!
Thanks and best wishes,
TMFDatabaseBob
See my holdings here: http://my.fool.com/profile/TMFDatabasebob/info.aspx
Peace on Earth

Please note: I am not a member of any newsletter team. My opinions are my own and do not necessarily reflect those of the TMF advisers. I am not an investment professional, merely an investor.
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