Go to Jeff Salisbury LWGate Home Page.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 - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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