Re: [CANSLIM] EPS Rating vs Actual EPS Numbers

From: Spencer48@aol.com
Subject: Re: [CANSLIM] EPS Rating vs Actual EPS Numbers
Date: Tue, 29 Jan 2002 21:37:35 EST

Next Article (by Subject): [CANSLIM] how can non-US residents trade US stocks "K.M Omer"
Previous Article (by Subject): [CANSLIM] Andersen Revisited Dave Cameron
Articles sorted by: [Date] [Author] [Subject]

Katherine:

     Tomorrow's "Ask WON" in IBD.com talks about pro forma accounting.  WON 
defines and explains pro forma accounting from a CANSLIM perspective (ie. as 
to what he views as important in what pro forma leaves out and what it 
includes.)

"Ask Bill O'Neil Archives, Tuesday, January 29, 2002-- 

'Could you define and discuss a term much in the news lately: pro forma 
accounting? " - Submitted from Kankakee, Ill.         
Answer: Pro forma accounting was a term that first came into widespread use 
during the dot.com bubble. Pro forma accounting is not compliant with 
Generally Accepted Accounting Principles (GAAP), and sometimes excludes basic 
cost such as marketing and interest. The main objective of pro forma earnings 
is to demonstrate true operating earnings. However, it is up to management to 
decide what expenses are really part of ongoing operations. The risk here is 
that some expenses are overlooked or classified as nonoperating, and thus not 
included in pro forma results. In addition, pro forma statements are usually 
unaudited. Nevertheless, pro forma has gained in use because many companies 
use it as a way to convey how their core operations have been performing, and 
they argue that line items such as goodwill expense, or stock options, may 
hide the true growth in earnings of the their core operations. Furthermore, 
many companies are under intense pressure to make their earnings numbers, or 
to turn a profit, so they have relied on pro forma earnings to give them an 
edge. Wall Street has accepted the use of pro forma earnings because they, 
like the companies they follow, are constantly trying to find inflection 
points in company reports where a company's core operations have just begun 
to change"

jans


In a message dated 1/29/2002 4:14:32 PM Eastern Standard Time, 
kmalm@earthlink.net writes:

<<On EXPE in particular, you have discovered the wonders of proforma 
reporting. DGO uses proforma and so you will notice that their numbers are 
POSITIVE! Last 4 quarters are proforma EPS positive. Prior 4 quarters 
proforma are negative. BUT cashflow *is* positive. (See attached) Dig into 
the financials and you will find where the one time expenses are being 
eliminated. 
 
 Katherine
  >>

- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim".  Do not use quotes in your email.

Go to Jeff Salisbury LWGate Home Page.