[CANSLIM] Fw: more incorrect earnings forecast data [T200206300070]

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: [CANSLIM] Fw: more incorrect earnings forecast data [T200206300070]
Date: Tue, 2 Jul 2002 22:09:47 -0400
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more feedback from DGO on their presented data for earnings forecasts. Based
on this, I think I am either going to have to check the math before I
include or exclude a stock on my WWW list, or else totally ignore the
forecast and just focus on the chart, and leave any interested users to do
their own due diligence on whether earnings growth looks to be 20% or not.

- ----- Original Message -----
From: <Custserv@dailygraphs.com>
To: <stkguru@bellsouth.net>
Sent: Tuesday, July 02, 2002 1:13 PM
Subject: RE: more incorrect earnings forecast data [T200206300070]


Hello again Tom,

Thank you for the follow up email.

In a nutshell, Yes. The issue you raise is an important one so we would like
to take this time to address you concern in detail.

There a lot of issues out there in the investment community right now
dealing with this inconsistency in financial reporting going around. This
issue has been put to forefront due to certain events over the past twelve
months. In fact, FASB has recently changed its rules relating to
amortization of goodwill and new and more limiting rules will likely be in
place soon in the accounting community. This recent Ask Bill addresses the
topic:

http://www.investors.com/askBill/SearchResults.asp?ID=606&StartDate=4&TopicI
D=4&code=ByTopic

Since we are not a brokerage with analysts making buy/sell/hold
recommendations, we outsource our earnings estimates to what is generally
considered the largest and most respected supplier of this earnings estimate
data, Thomson Financial, the parent company of First Call.

But our Research Department is also not going to change the way we have been
processing earnings data for years and years to create our William O'Neil
Database to conform with Thomson. The profit figures on which we base the
EPS rating and the EPS figures you see in IBD and Daily Graphs Online are
"normalized" earnings per share, which are a type of pro forma results.
These don't always conform with Generally Accepted Accounting Principles
(GAAP), but they better reflect a company's ongoing operations.
Specifically, the after-tax amount (if given) of one-time gains and charges,
extraordinary items, and other nonrecurring items are backed out of net
income by our research staff in order to arrive at a "normalized" figure.
Our studies have found that the normalized figure is the most appropriate in
analyzing a stock's past earnings growth and its potential going forward.

In reference specifically to next year Thomson Financial figure that may not
match the EPS Percentage Change, they tend to follow what is generally
referred to as "Street" figures or "Wall Street" estimates that exclude
certain non-recurring items. Many Wall Street analysts choose to ignore
one-time charges altogether, even though some are considered part of
ordinary operations under generally accepted accounting principles. They
argue that such write-offs are a relic of the past and say little about the
outlook for a company's future. Sometimes items that qualify for exclusion
in "Street" terms do not fit in the more restrictive William O'Neil and
Company Research Department earnings modeling rules. Thus the difference
between the reported William O'Neil figure you see in Fiscal 2001 and the
corresponding percentage change for the Fiscal 2002 EPS estimate.

Until the SEC, the Financial Accounting Standards Board (FASB, which
outlines Generally Accepted Accounting Principles, GAAP) and others agree to
a uniform earnings reporting standard, these types of differences will be
seen from time to time in the financial community. You can read recent news
about these types of issues at www.fasb.org and
http://www.sec.gov/investor.shtml

You can also visit www.investors.com and click on "click here for today's
answer" in the Ask Bill O'Neil Q & A section. There are numerous answers to
questions about the O'Neil database and commentary specifically related to
certain FASB rules and pro forma figures.

Please email us again if we can help in any way.

Sincerely,

Paul
Daily Graphs Online
www.dailygraphs.com


- -----Original Message-----
Subject: Re: more incorrect earnings forecast data
[T200206300070Z1265502]


Sender          : stkguru@bellsouth.net
Tracking Number : T200206300070Z1265502
Pool            : Daily Graphs Online
Sent to         : <Custserv@dailygraphs.com>
Date            : 7/1/02 5:28 PM
- ---

Paul,

so what you seem to be telling me is that I should get used to this
confusing portrayal of two different data sets, one displaying the actual
prior year (calculated by the 50 research analysts on WON staff), and a
current year estimate, and percentage change, calculated by ThompsonFN which
uses earnings for last year (not displayed)??

WON, HTMMIS, and IBD all advocate only looking at stocks with a 20% or
better earnings forecast. So now who's forecast do I use? ThompsonFN, using
actual results for the prior year? Or calculate my own percentage, guessing
what the WON staff of 50 researchers would have come up with?

I am cc'ing my online CANSLIM discussion group, since many there also
subscribe to DGO, and are likely to be as confused as I am by this mixed
presentation.

- ----- Original Message -----
From: <Custserv@dailygraphs.com>
Sent: Monday, July 01, 2002 11:12 AM
Subject: RE: more incorrect earnings forecast data [T200206300070]


Hello Tom,

Thank you for the email.

Along with additional data items, the new version of Daily Graphs Online
features three years of annual EPS data provided by ThomsonFN.com, including
two years of estimates. You can visit Thomson Financial at its home page
http://www.thomsonfn.com as they are a global provider of data, analysis and
information for the investment community.

The three years of data from Thomson Financial - their last year's reported
EPS, this year's EPS estimate and next year's EPS estimate - occasionally
does not match in terms of Estimate Percentage Change from what you see in
Daily Graphs Online. The estimate percentage change figure is based on
Thomson Financial's last year reported EPS which is not displayed in Daily
Graphs' 7-Year Annual Earnings Per Share area.  The EPS estimate percentage
change figures are calculated using ThomsonFN data to maintain an apples to
apples comparison. In certain cases, the ThomsonFN actual EPS data for the
most recent fiscal year does not match the actual EPS figure in the William
O'Neil + Co, Inc. database that is displayed in Daily Graphs Online. The
discrepancy in the EPS estimate percentage change is due to the variation in
the methods used by William O'Neil + Co., Inc. and ThomsonFN when processing
EPS data.

The William O'Neil + Co., Inc. research department is comprised of about 50
analysts and all earnings data is processed through this department from a
variety of public sources such as company press releases and SEC filings. If
a company reports earnings that include non-recurring, extraordinary items,
our research staff will go the extra step to back this out so as to report
earnings from continuing operations, after tax.

The cases that you mention fall into three categories. Sometimes Thomson
does not have a prior year's estimate as is the case for ELTE, MCRI and
AIRM, thus an N/A is displayed. Other times the Thomson figures for the
prior year are negative as is NWRE, they have a loss of $.05/shr for the
prior year's EPS. A negative to a positive is displayed as N/A. However, the
William O'Neil & Co Research Dept has a positive figure as we have excluded
certain non-recurring acquisition costs. The third case is similar, the
Thomson figure and our Research figure are just simply different but both
are positive. MSC has a figure of about $1.10, that is why the Percentage
Change shows down 65%. The Research figure is the one you see, a loss of
$.22/share with the blue triangle indicating certain non-recurring charge
are included in the EPS figure, specifically an $8.4 mil impairment charge.

One thing to keep in mind is we still have our Image Map feature under the
Help toolbar. The image map feature gives a sample chart of the Daily and
Weekly views and you can click on any items to see a detailed glossary
description of the item.

We apologize for the confusion.

Feel free to contact us if you have further questions.

Sincerely,

Paul
Daily Graphs Online
www.dailygraphs.com

- -----Original Message-----
Subject: more incorrect earnings forecast data [T200206300070Z1263755]


Sender          : stkguru@bellsouth.net
Tracking Number : T200206300070Z1263755
Pool            : Daily Graphs Online
Sent to         : "DGOnline Customer Service" <custserv@dailygraphs.com>
Date            : 6/30/02 7:20 AM
- ---


NWRE - you show 2001 at 5 cents, forecast for 2002 at 22 cents, but the
change is shown as N/A rather than 340%
MCRI - 49 cents for 2001, 92 cents forecast for 2002, still the change is
N/A
AIRM - 69 cents for 2001, 56 cents forecast for 2002, again change shown as
N/A

Tom Worley
stkguru@bellsouth.net
AIM: TexWorley















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