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Subject:  Re: Tier 1 RMs using new calculations Date:  4/14/1999  9:25 PM
Author:  TMFVerve Number:  2298 of 8329

Has anyone found any companies that score above 50 using the new RM calculations for Foolish Flow ratio and cash to debt?


Actually, in the post immediately prior to yours (#2295), I ranked Intel's most recent quarter versus AMD and National Semi, and Intel scored a 54. Interestingly enough, I may have even short-changed Intel a little bit because I accidentally used the balance sheet numbers from the Dec '98 quarter, rather than the year-ago quarter (Mar '98). Intel is without a doubt the Rule Maker exemplar of the microprocessor industry.

Should we lower the ranges of what's considered Tier 1/Tier 2/Tier 3 when we are using the new formulas?

I may be in the minority on this, but I think it's advantageous to have a strict scoring system. The current tier structure makes a score above 50 a truly remarkable accomplishment, and even a score above 40 is pretty darn good (especially if we have reason to believe the company is moving up).

I've scored several of our companies recently, and each time I grow more convinced that our present ranking system is dead-on right. For example, I recently scored Pfizer vs Schering-Plough using their 1998 full-year numbers. Pfizer scored 48, so it's at the top end of Tier II. This seems exactly right to me considering that in almost every way Pfizer is a fantastic company, but its Flowie isn't quite up to par. So, 48 registers in my mind as the fair score for the company. Another example is Coke. I just scored it vs Pepsi based on their full-year '98 numbers, and Big Red came in with a 42. Considering that '98 was a tough year with the turbulence in foreign economies, a low-end Tier II seems right. I expect that when overseas markets regain some normalcy, Coke will score closer to 50. By the way, Pepsi scored a measly 27 when I turned the tables.

What do other Fools think on this issue?

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