The headline is just ignorant and stupid. the difference is round-off differences in Wall Street spreadsheets. Actuals were within 5% of what a seasonally adjusted regression would have predicted. The current price suggests a growth rate of
I use seasonally adjusted regression of past revenues to forecast future results. Estimate net profit based on profit margins and EPS from there. I then estimate a fair price using Ben Graham's value formula.
First, BIDU's revenues yesterday were 2.2% below the predictable historic trend. Net profit and EPS were above what this method predicted. Anybody that was surprised wasn't looking at the data. The quarter reported has been the lowest profit margin quarter of the year for the last 16 quarters (averaging 23% versus 47%, 40% and 30% for the next three, if history repeats itself.)
Next quarter, expect:
Revenues - $3.2B
Net Profit - $680M
EPS - $1.95
Estimated fair value - $220 using a growth rate of 12%, the rate at which net income has grown over the last three years. The current price indicates a future growth rate of 7.7%
The R^2 on the regression is 0.993
This is the most conservative of the predictions I can make from my regression of the raw data. Revenue has been growing more than 40% per year. Net profit margins for the next quarter are more likely to be 40% than 23%. These assumptions would put the fair price 2-3x higher. The market has over-reacted, which significantly lowered the risk of buying the stock now.
I welcome critique of my method or new or corrected historical data.
Sentiment: Strong Buy
Does Nu Skin have a history of providing conservative guidance? Revenue of $650M, growth of 20% would be pretty good, deserving a PE higher than the current price reflects. The trend in historical revenue suggests that their prediction is low.
Stock price and the corporate performance ALMOST ALWAYS converge. So, do you have any facts to support claiming that corporate performance is about to go in the tank? Or is this a buying opportunity because the stock price dropped unreasonably low. One or the other scenario is far more likely than a random walk up and down 30-50% a week.
Stock splits are irrelevant. It has been clearly shown that stock prices after a split continue on the same trend as they were on before the split. Therefore, there is no real justification for a split.
I suspect that the stock has been manipulated by the Chinese media so that Communist Party officials can buy shares for a lower price. In America, as biased as our strongly liberal leaning media is, there are consequences for false accusations. The company's revenue has been growing 20%+ for four years. Net income has grown faster than that. The market ALWAYS over-reacts. That over-reaction may not be over but the stock no longer reflects the value of the underlying company.
Just me and S&P. If your brokerage account offers a report that provides the non-GAAP earnings, I'd love to see it. I have been unable to find any site that reports the non-GAAP summary similar to the S&P summary.
I agree with the assessment of GAAP versus non-GAAP. But all accounting leaves a lot to be desired, probably in part due to the fact that half the accountants in the world dropped out of engineering school because it was too hard.
Interesting that S&P is "grossly wrong." They summarize the previous four quarters EPS as (in reverse order) $.69, $.71, $2.71, $.56. You're looking at non-GAAP earnings, which are much higher than GAAP earnings. I'll stick with GAAP, since those are sustainable.
Per their website, AZUR and EUSA both took place in 2012, so that's not a new spike but one already included in the earnings reports from this year.
But I see the discrepancy now. My forecast considers GAAP earnings, which is what is reported in the S&P tear sheet. The $1.67 must be the non-GAAP "adjusted" earnings ($1.43), a huge difference. I'm a statistician, not an accountant, so I can't explain the difference is between GAAP and adjusted, though I suspect that "amortization of intangible assets" will eventually spiral to zero - that's the amount the paid over the tangible value of stuff they bought, right?
But my price targets, considering the GAAP reported earnings, suggest that the stock is undervalued relative the performance of the underlying company.
Sentiment: Strong Buy
My forecast is consistent with the quantitative data in the historical record. $1.67 is more than any three previous quarters combined (except for one odd quarter last year.) There must be some factor that is not in the historical record to explain the extra $.80. I miss buying stocks that require that extra qualitative analysis, but my quantitative approach helps me avoid emotional purchases.
Sentiment: Strong Buy
I concede Jazz revenue isn't very seasonal but I analyze all companies with the same process, which estimates the seasonality of each company separately. And some pharmaceutical companies are very seasonal - Matrix (maker of cold medicine) generated about 75% of its annual revenue during the January-March quarter.
Looking at the EPS forecasts, the $1.67 prodded me to look for errors in my data; all revenues, eps and shares outstanding matched the S&P tear sheet. The average analyst estimate suggests a net profit margin of ~40%, twice the previous quarter. Any idea what gigantic windfall is coming? Looking back to 2008, there was one quarter EPS of $2.71, more than the previous fiscal year. I don't have any notes about what happened that quarter, either. Something to do with their last merger?
Sentiment: Strong Buy
No. It's up 205%. The price is 3.05x it's 52 week low. I tend to discount advice from people who don't understand 5th grade math.
Sentiment: Strong Buy
Based on my seasonally adjusted forecast, the company's past history suggests we'll get $260M in revenues, but I'll temper that forecast by saying, I'll be happy if revenues come in at ~$230M. This would mean EPS of ~$0.80. My twelve month target is $100. My five year target is $300.
Kind of ironic that this is exactly the same amount you made in Ambarella. Why don't you at least modify your spam so that its a little different on each stock you claim helped you make tons of money trading.
Do you believe that the company can continue to grow at the pace of the last 3-4 years without making an acquisition? If they can continue to grow revenues at 10%+ per year, then a PE higher than about 9 is certainly a fair expectation. If all the growth has been due to acquisitions, and if those acquisitions are now going to be limited, I agree there is reason for concern.
I would rather this company invest profits in growing the business and increasing the value of the company versus receiving dividends. I buy stocks like CAT, F and Honeywell to collect dividends.
An interesting interpretation of the "Key Statistics."
Net Profit Margin: 9.3%
Operating Profit Margin: 16.84%
Return on Equity: 14.01%
Revenue Growth: 4.7%
All from Yahoo.
The only one of these that is actually not doing well is PE. So the stock hasn't responded to corporate performance. Please explain how this translates into "This company has been run into the ground. . . ."
My analysis indicates that the stock price is consistent with a company "growing" -1.1% per year. I'd say the stock price is out of sync with the company. Convince me it's because the price is too high, with historical performance data to support your convincing.
Can you provide any rationale for why you're shorting the stock. The company is growing 15% per year but the stock trades like the growth rate is 7%. Revenue is predictable enough to be boring. I expect $44.6M at the next report - this is their biggest quarter of the year, producing nearly 30% of their annual sales, adjusted for seasonal effects. My twelve month price target for the stock is $35 if the company continues its past performance.
Maybe you've got a reason. Maybe you're technical analysis works. If so, share the method. It's easier to believe recommendation if you're analysis is a little bit more transparent than just sharing the direction your lucky quarter predicts when you flipped it last.
Do you have a fundamental reason why do you think a company growing revenues at a CAGR of 16% and net income at a CAGR of 41%, both over the last 36 months, deserves to be valued at TTM PE of 17? In today's interest rate environment, Ben Graham's value formula would suggest a PE of more about 27. The current price is indicative of a company expected to grow 6%. The price appears out-of-sync with the company's performance.
If you rely on technical analysis alone, I'd still like to hear your answer to the question.