Re: [CANSLIM] Validity of Earnings Reports

From: Harvey Brion <hbrion@ieee.org>
Subject: Re: [CANSLIM] Validity of Earnings Reports
Date: Tue, 16 Apr 2002 10:51:46 -0700

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Don't want to speak for Tom, Ian.  I think the year-over-year comparison
is still quite valid.  However, sequential growth suggests a business
that does not have much seasonality associated with it, or a company
that is growing so fast that the seasonality is not yet a dominant
factor.  -Harvey

Ian wrote:

> "I preferred stocks showing consistent top and bottom line growth both
> sequentially and year to year" Tom: Isn't the 'requirement' for
> sequential growth a recent artifact of the tech bubble? It seems to me
> that both CANSLIM and growth investing had always allowed for business
> seasonality - as long as the y-o-y numbers were solidly up for each
> season, it was still considered a growth stock that could command a
> premium valuation. Do you think this has changed? Do you think that
> the 'blessed' stocks now demand sequential growth too? Thanks, Ian
>
>      ----- Original Message -----
>      From: Tom Worley
>      To: canslim@lists.xmission.com
>      Sent: Sunday, April 14, 2002 6:11 PM
>      Subject: Re: [CANSLIM] Validity of Earnings Reports
>       Ira, I don't think you can protect yourself from a company
>      that is deliberately falsifying their financials, or using
>      creative accounting to cover up real issues. you would have
>      to not only have an accounting degree, but go in and do an
>      independent audit, which is not practical. Best you can do
>      is look for consistency (and inconsistencies) in the 10Q and
>      10K reports. Read Management's discussion. Question or dig
>      deeper into anything that doesn't make logical sense. Look
>      for any changes in accounting procedures from prior
>      periods. Even before Enron, I preferred stocks showing
>      consistent top and bottom line growth both sequentially and
>      year to year. Now, that is even more important to me. If
>      they are fudging, at least they are doing it
>      consistently. Tom Worley
>      stkguru@bellsouth.net
>      AIM: TexWorley
>      ----- Original Message -----
>      From: Ira Post
>      To: canslim@lists.xmission.comSent: Sunday, April 14, 2002
>      9:06 PMSubject: [CANSLIM] Validity of Earnings Reports
>       This has become a huge issue in the last year.  I'm
>      bringing it up to this list because earnings growth is such
>      an important part of CANSLIM.  What do you do to protect
>      yourselves from companies that fudge their real earnings?
>


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