Too bad the stock gains weren’t that good…
Once a company is recognized as a fast grower, the P/E grows too. Leaving them very susceptible to the slightest bad news…
In fact I have come to believe that the only good time to buy them is at such a moment. Patience (not one of my virtues) until that time comes. Or toward the end of a bear market. As long as neither of these events alters my original reason for being interested in the company.
Too bad the stock gains weren’t that good…
Hi Mauser, You are forgetting that if earnings are up 50% for the quarter, EACH quarter, they are only up 50% for the entire year. So you’d expect a 50% rise in the stock FOR THE YEAR, not the quarter. Now an 11% rise per quarter compounded gives you a 52% rise for the year, and it just so happens that my portfolio at yesterday’s close was up 11.0% exactly, and the quarter wasn’t even finished yet, so I’m 10 days ahead of schedule.
Saul
Too bad the stock gains weren’t that good…
Hi Mauser, I posted this on the board at one point but I’m not sure you noticed it. Your reasoning on the above isn’t correct. You are forgetting that if earnings are up 50% for the quarter, and up 50% each and every quarter, they are only up 50% for the entire year. So you’d expect a 50% rise in the stock FOR THE YEAR, not the quarter. Now my portfolio is up 13.2% so far, for the quarter, and a 13.2% stock price rise per quarter, compounded, gives you a 64.2% gain for the year (and the quarter still has a month to go), so the stock gains are keeping up quite well with the 70% rise in earnings.
Now I certainly don’t know if the earnings will keep going up at 70% per quarter, and I more than certainly don’t know if the stock prices will keep going up at 13% per quarter, but so far, so good.
Saul
Here are the thirteen stocks of mine that have reported so far, with their earnings for the fourth quarter this year and last, and the percent increase. EPAM, which just reported, was up 29%, which is very good, considering that a lot of their employees were in a war zone in the Ukraine. Thanks to Anirban for this suggestion which is up about 24% in the less than two months since I bought it at his recommendation. (It will probably pull back a little after earnings, in my opinion).
I had them arranged by when they reported, but here they are by percent increase:
WAB ----- 95/79 = 20.3%
EPAM ---- 62/48 = 29.2%
CELG – 101/75.5 = 33.8%
BOFI –-- 126/91 = 38.5%
POL - - - 36/26 = 38.5%
INBK – - 32/19 = 68.4%
SYNA –-- 146/86 = 69.8%
FB - ---- 54/31 = 74.2%
SWKS –-- 126/67 = 88.1%
AMAVF - 15.0/7.6 = 97.4%
SKX ----- 57/28 = 103.6%
CRTO ---- 37/13 = 184.6%
XPO ----- ??/?? = >200%
Average gain in earnings (removing my two biggest outliers (CRTO and XPO) as they would unrealistically raise the average, and one smallest (WAB), to balance) = 64.1%
This has really been an amazing quarter quarter!!! Almost finished.
Saul
Congratulations on the amazing results you and the rest of the “team” in this board have achieved from an outstanding selection of great companies.
Me too! have had great quarter so far this year!
Maria
EPAM, which just reported, was up 29%, which is very good, considering that a lot of their employees were in a war zone in the Ukraine… (It will probably pull back a little after earnings, in my opinion).
Well, I was wrong. EPAM is up about 4% more as I write.Just shows that short term movements can’t be predicted.
Saul
Average gain in earnings (removing my two biggest outliers (CRTO and XPO) as they would unrealistically raise the average, and one smallest (WAB), to balance) = 64.1%
Saul,
It might be more useful to calculate the weighted average based on the position size of each holding.
Chris
It might be more useful to calculate the weighted average based on the position size of each holding.
Too much work for me Chris as I don’t really use that number for anything. It’s just for fun.
Saul
Too much work for me Chris as I don’t really use that number for anything. It’s just for fun.
It’s not as much work as you may think. The reason that I suggested that it might be useful is the following. You will end up with a weighted averaged adjusted EPS growth rate. To get this all you need to do is multiply each company’s EPS growth rate which you already have. Then multiply that by you % allocation which you also already have. The sum these products. This number is not useful on its own but you can compare it to the weighted average P/E. This will give you a snapshot of the growth rate and P/E for your portfolio which you can track over time. This gives you an idea of how expensive your portfolio is relative to the EPS growth. Ultimately you are picking stocks based on EPS growth versus P/E (i.e. it’s you primary criterion when choosing to invest in a stock). Having a gauge of how expensive your portfolio is over time might be interesting…and might also be fun.
Chris
Morningstar’s portfolio tracker will do this for you if you’re tracking your portfolio on their site which is free.
Chad
so far, so good:
https://docs.google.com/spreadsheets/d/122OtxRVIJelV1DXqbqbN…
Your top dogs are carrying their weight,
It has been a pleasure to watch your work in progress…
Given the terrific increase in the growth of the various company’s earnings…As a comparison … how did the earnings increase compare to an increase in the market value of the company’s stock?
Here are my fourteen stocks that have reported so far, with their earnings for the fourth quarter this year and last, and the percent increase. PSIX, which reported last night, was up 100%%, which is incredibly good, considering that oil prices are down.
I had them arranged by when they reported, but here they are by percent increase:
WAB ----- 95/79 = 20.3%
EPAM ---- 62/48 = 29.2%
CELG – 101/75.5 = 33.8%
BOFI –-- 126/91 = 38.5%
POL - - - 36/26 = 38.5%
INBK – - 32/19 = 68.4%
SYNA –-- 146/86 = 69.8%
FB - ---- 54/31 = 74.2%
SWKS –-- 126/67 = 88.1%
AMAVF - 15.0/7.6 = 97.4%
PSIX ---- 48/24 = 100.0%
SKX ----- 57/28 = 103.6%
CRTO ---- 37/13 = 184.6%
XPO ----- ??/?? = >200%
Average gain in earnings = 72.8%
I had been removing outliers, but now that I had more data points I included all of them except XPO. I had thought to find some metric I could use for XPO, but all of them (Gross revenue, Net Revenue, Adjusted EBITDA, etc) were all up over 200%, and Adj EPS was still negative, so I just didn’t include XPO.
This has really been an amazing quarter quarter!!! Almost finished. Just waiting for AIOCF.
Saul
Your top dogs are carrying their weight, It has been a pleasure to watch your work in progress…
Thanks Darrell, that’s a really really interesting table. As I figure your totals, my top four are up about 17.65%, which is a little better than my overall totals, so they are pulling their weight.
Best,
Saul
I now have all 15 stocks reported, with the addition of AIOCF last evening which reported earnings up 31.5% (less than revenue, which was up 42%, but they are spending on gaining market share).
Here they are arranged by percent increase. As you remember, what you see is adjusted earnings for this quarter and last and the percent increase.
WAB ----- 95/79 = 20.3%
EPAM ---- 62/48 = 29.2%
AIOCF ----
CELG – 101/75.5 = 33.8%
BOFI –-- 126/91 = 38.5%
POL - - - 36/26 = 38.5%
INBK – - 32/19 = 68.4%
SYNA –-- 146/86 = 69.8%
FB - ---- 54/31 = 74.2%
SWKS –-- 126/67 = 88.1%
AMAVF - 15.0/7.6 = 97.4%
PSIX ---- 48/24 = 100.0%
SKX ----- 57/28 = 103.6%
CRTO ---- 37/13 = 184.6%
XPO ----- ??/?? = >200%
Average gain in earnings = 69.85%. That’s really pretty amazing when you think about it!
I had been removing outliers, but now that I had more data points I included all of them except XPO. I had thought to find some metric I could use for XPO, but all of them (Gross revenue, Net Revenue, Adjusted EBITDA, etc) were all up over 200%, and Adj EPS was still negative, so I just didn’t include XPO.
This has really been an astounding quarter!!! I doubt we’ll see four like this.
Saul
Sorry:
WAB ----- 95/79 = 20.3%
EPAM ---- 62/48 = 29.2%
AIOCF ---- 25/19 = 31.5%
CELG – 101/75.5 = 33.8%
BOFI –-- 126/91 = 38.5%
POL - - - 36/26 = 38.5%
INBK – - 32/19 = 68.4%
SYNA –-- 146/86 = 69.8%
FB - ---- 54/31 = 74.2%
SWKS –-- 126/67 = 88.1%
AMAVF - 15.0/7.6 = 97.4%
PSIX ---- 48/24 = 100.0%
SKX ----- 57/28 = 103.6%
CRTO ---- 37/13 = 184.6%
XPO ----- ??/?? = >200%
I now have all 15 stocks reported, with the addition of AIOCF last evening which reported earnings up 31.5% (less than revenue, which was up 42%, but they are spending on gaining market share).
Saul,
For SKX you added back forex loss. Why did you not subtract forex gain from AIOCF?
Chris
Hi Chris, You ask why I didn’t subtract the forex gain from AIOCF? Maybe you didn’t notice, but they state very plainly in the press release that they already removed it when they gave us the adjusted earnings. That’s what adjusted earnings are, and why I use them.
Saul
The term “Adjusted Earnings” and “Adjusted Earnings Per Share” refers to net earnings and earnings per share, respectively, before share-based payments, foreign exchange gain or loss, business acquisition-related costs, non-recurring legal costs, amortization of acquired intangibles and related tax effects.
Thanks Saul. I didn’t notice. I’ll have a closer look at their earnings result in a few days.
Saul et al
AIOCF down almost 14%. Any idea why?
Thanks,
Best
Andy