My results for the earnings season so far

Investment Analysis Clubs Saul’s Investing Discussions
21

PSIX, one of my smallest positions, just reported. This brings it up to 14 out of my 15 stocks that have reported earnings for this quarter. The only one remaining is AMBA, whose quarter just ended at the end of April. PSIX was disappointing, which I should have anticipated as part of their sales were to the oil and gas industry, but as it it’s a very small position, I’ll have to think about what to do about it.

Here they are with the year-over-year percent gain in earnings for the quarter.
WAB ---- 99/83 = 19.3%
FB ------- 42/35 = 20.0%
SKX ---- 110/61 = 80.3%
INBK — 46/13 = 253.8%
SYNA — 165/63 = 161.9%
SNCR ---- 49/39 = 25.6%
CELG ---- 107/83 = 28.9%
BOFI ---- 135/100 = 35.0%
SWKS —115/62 = 85.5%
POL ------ 46/44 = 4.5 %
XPO ------(13)/(40) = >150%???
CRTO ---- 28/12 = 133%
EPAM — 61/47 = 29.8%
PSIX -----20/24 = -16.7%

The average year-over-year gain in earnings so far this quarter for my portfolio stocks has been 66.3%. (XPO isn’t counted for reasons I explained in an earlier post in this thread). The largest two positions (SWKS and SKS), making up almost 30% of my total portfolio, grew their earnings by 85.5% and 80.3%. ---- And, if you are comparing, the December quarter results, for my entire portfolio, were an average gain of 69.85%.

And here’s the 1YPEG information, with the results as of the time of reporting.
WAB ---- PE was 25.3, TTM earnings growth is 20.0%, so 1YPEG was 1.26
FB ------- PE was 47.0, TTM earnings growth is 62.1%, so 1YPEG was 0.76
SKX — PE was 21.5, TTM earnings growth is 131.6%, so 1YPEG was 0.16
INBK — PE was 14.6, TTM earnings growth is 48.8%, so 1YPEG was 0.30
SYNA — PE was 15.9, TTM earnings growth is 33.9%, so 1YPEG was 0.47
SNCR — PE was 26.0, TTM earnings growth is 30.3%, so 1YPEG was 0.86
CELG — PE was 28.7, TTM earnings growth is 26.2%, so 1YPEG was 1.10
BOFI ---- PE was 19.0, TTM earnings growth is 38.6%, so 1YPEG was 0.49
SWKS – PE was 21.2, TTM earnings growth is 76.5%, so 1YPEG was 0.28
POL ----- PE was 21.5, TTM earnings growth is 27.3%, so 1YPEG was 0.79
CRTO — PE was 38.2, TTM earnings growth is 320%, so 1YPEG was 0.11 (the lowest of any).
EPAM — PE was 28.1, TTM earnings growth is 32.6%, so 1YPEG was 0.86
PSIX -----PE was 47.5, TTM earnings growth is 44.2%, so 1YPEG was 1.07

Average PE so far was 27.3. Note that Facebook, PSIX, and Criteo were the only ones with a PE over 30! (I’m now out of FB). Also note that the HIGHEST PE of my three largest positions (SWKS, SKX, BOFI), making up over 43% of my portfolio, was just 21.5!!! This is NOT an inherently risky portfolio!!!

Average TTM earnings growth is 64.2%. Again, the largest positions in my portfolio (SWKS and SKX), in spite of their low PE’s of 21.2 and 21.5, had the highest trailing growth rates (besides CRTO) of 76.5% and 131.6% (and consequently among the lowest 1YPEG’s)

As far as 1YPEG, 4 of the 14 stocks had 1YPEG’s of 0.30 or less !! Two more were under 0.50. Four were between 0.50 and 1.00, and two slower growing stocks and PSIX were a little over 1.00. XPO had negative earnings.

Again, this is almost the opposite of a MF RB portfolio, where everything is over priced (it’s actually one of the criteria they look for), with enormous PE’s, and 1YPEG’s way over 1.00 (or 2.00, or 3.00). Our average PE is 27.3, yet the quarterly increases in earnings averaged 69.8% last quarter and are at 66.3% so far this quarter. Think about that!!! And the average TTM earnings growth is 64.2%! Just saying…it can be done.

I’m glad that people have found this interesting.

Saul

25 Likes
22

Saul,

Again, thanks for your insights, as well as those of others on the board…very helpful to me.

andy

23

Saul,

Thank you for giving us a detailed view of your investment philosophy. I have learnt a lot in the last few months, both from your posts and others who post in these boards.

Quick question: Do you try to use intrinsic value of a company to determine whether you want to buy or sell? I read your FAQ and the way I understand is that you are interested in growth companies with reasonable PE, 1YPEG, etc. But I could not find any reference to intrinsic value of a company. Do you consider this or is it implied by other metrics such as low PE, 1YPEG?

Thanks,
Chandy

24

Hi Chandy, What do you mean by intrinsic value. Are you referring to book value (asset value) of a company? If so, that has very little relation to the market value of the company unless you are talking about a bank (or similar company).

25

http://www.investopedia.com/terms/i/intrinsicvalue.asp

The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value

Saul,

I understand it as a value assigned by value investors based on discounted cash flow or other valuation techniques.

My guess is that you don’t care much for it since you focus on growth stocks with reasonable PE, 1 YPEG, etc. I am not sure and that’s why I asked the question.

Thanks,
Chandy

26

One of the problems with a concept like intrinsic value is "use a variety of analytical techniques in order to estimate the intrinsic value, i.e., they can only be estimated and frequently by methods that use factors which are essentially unknowable so the estimate is of dubious validity.

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27

Chandy, most of us “know” what intrinsic value is but most of us don’t know how to put a number to it. DCF is one attempt but fraught with guesstimates.

Security Analysis by Ben Graham went through four editions staring in 1934. in the first edition bonds were investing and stocks speculation. As time went on Ben Graham’s view of the intrinsic value of businesses changed. At first book value and the ability to pay off the bonds were central to intrinsic value. Book value is no longer as useful in the age of “asset light” enterprises and growth acquires greater importance.

Of course, DCF is the perfect method if only you could get the cash flow and the interest rates right – but that is impossible.

Denny Schlesinger

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28

Thanks Denny and tamhas!

For now, I am going to pass on DCF :slight_smile: and rely a bit more on Earnings Growth, PE and 1YPEG.

  • Chandy
1 Like
29

Hi Saul

On INBK you have them growing earnings at 48% on a TTM basis while I see TTM of 1.28 vs TTM year earlier of 1.16 for a growth rate of 10%. A little clarification please?

Alex

30

On INBK you have them growing earnings at 48% on a TTM basis while I see TTM of 1.28 vs TTM year earlier of 1.16 for a growth rate of 10%. A little clarification please?

Hi Alex, I have the same $1.28 as you for the last four quarters, but for the four quarters before that I have 86 cents:

June 2013 - 38
Sept 2013 - 16
Dec 2013 - 19
Mar 2014 - 13

38+16+19+13 = 86

I believe that is correct but please let me know if you find different information.
Thanks
Saul

31

Hi Saul

The discrepancies are on the June 13 where you have .38 vs my .59 and Sept 13 where you have .16 vs my .25. The ratios of .38/.59 and .16/.25 are equal which leads me to believe this is an effect of the secondary offer which I have missed.

teach them how to fish

Hell, you taught me how to build a boat and how to sail! Fishing? No! I’m off to join the merchant fleet.
Alex

1 Like
32

AMBA, the last of my positions just reported, so I can give you my entire results of the earnings season. Remember that PE’s etc are as of the day of reporting and not updated

Here they are with the year-over-year percent gain in earnings for the quarter.
WAB ---- 99/83 = 19.3%
FB ------- 42/35 = 20.0%
SKX ---- 110/61 = 80.3%
INBK — 46/13 = 253.8%
SYNA — 165/63 = 161.9%
SNCR ---- 49/39 = 25.6%
CELG ---- 107/83 = 28.9%
BOFI ---- 135/100 = 35.0%
SWKS —115/62 = 85.5%
POL ------ 46/44 = 4.5 %
XPO ------(13)/(40) = >150%???
CRTO ---- 28/12 = 133%
EPAM — 61/47 = 29.8%
PSIX -----20/24 = -16.7%
AMBA— 71/25 = 184.0%

The average year-over-year gain in earnings this quarter for my portfolio stocks was 74.7%. (XPO isn’t counted for reasons I explained in an earlier post in this thread). ---- And, if you are comparing, the December quarter results, for my entire portfolio, were an average gain of 69.85%.

And here’s the 1YPEG information, with the results as of the time of reporting.
WAB ---- PE was 25.3, TTM earnings growth is 20.0%, so 1YPEG was 1.26
FB ------- PE was 47.0, TTM earnings growth is 62.1%, so 1YPEG was 0.76
SKX — PE was 21.5, TTM earnings growth is 131.6%, so 1YPEG was 0.16
INBK — PE was 14.6, TTM earnings growth is 48.8%, so 1YPEG was 0.30
SYNA — PE was 15.9, TTM earnings growth is 33.9%, so 1YPEG was 0.47
SNCR — PE was 26.0, TTM earnings growth is 30.3%, so 1YPEG was 0.86
CELG — PE was 28.7, TTM earnings growth is 26.2%, so 1YPEG was 1.10
BOFI ---- PE was 19.0, TTM earnings growth is 38.6%, so 1YPEG was 0.49
SWKS – PE was 21.2, TTM earnings growth is 76.5%, so 1YPEG was 0.28
POL ----- PE was 21.5, TTM earnings growth is 27.3%, so 1YPEG was 0.79
CRTO — PE was 38.2, TTM earnings growth is 320%, so 1YPEG was 0.11 (the lowest of any).
EPAM — PE was 28.1, TTM earnings growth is 32.6%, so 1YPEG was 0.86
PSIX -----PE was 47.5, TTM earnings growth is 44.2%, so 1YPEG was 1.07
AMBA —PE was 37.8, TTM earnings growth is 114%, so 1YPEG was 0.33

Average PE was 28.0. Note that the HIGHEST PE of my three largest positions (SWKS, SKX, BOFI), making up over 43% of my portfolio, was just 21.5!!! This is NOT an inherently risky portfolio!!!

Average TTM earnings growth is 67.8%. Again, the largest positions in my portfolio (SWKS and SKX), in spite of their low PE’s of 21.2 and 21.5, had some of the highest trailing growth rates of 76.5% and 131.6% (and consequently among the lowest 1YPEG’s)

As far as 1YPEG, 4 of the 14 stocks had 1YPEG’s of 0.30 or less !! Three more were under 0.50. Four were between 0.50 and 1.00, and two slower growing stocks and PSIX were a little over 1.00. XPO had negative earnings. I’ve sold out of PSIX for now.

Again, this is almost the opposite of a MF RB portfolio, where everything is over-priced (it’s actually one of the criteria they look for), with enormous PE’s, and 1YPEG’s way over 1.00 (or 2.00, or 3.00). Our average PE is 28, yet the quarterly increases in earnings averaged 70% last quarter and were at 75% this quarter. Think about that!!! And the average twelve-month earnings growth is 68%, just to show it isn’t a fluke! Just saying…it can be done.

Saul

For FAQ’s and Knowledgebase
please go to Post #7972

15 Likes
33

Again, this is almost the opposite of a MF RB portfolio, where everything is over-priced (it’s actually one of the criteria they look for), with enormous PE’s, and 1YPEG’s way over 1.00 (or 2.00, or 3.00). – Saul (emphasis added)

Not everything, Saul. :slight_smile:

You’ve got some RBs in that list of yours.

Rob
defending the world against the onslaught of hyperbole…

8 Likes
34

SKX — PE was 21.5, TTM earnings growth is 131.6%, so 1YPEG was 0.16

Not to picnic’s but I get different numbers on this one. I’ve gone through the press releases on number of times.

TTM Ear. 1.10. .43. 1.00. .68=3.21
.61. .28. .53. .14=1.56

TTM Earnings growth 106%

PE~33 as of today.

1Ypeg~.31

Alex

35

It’s blasted off since the last earnings date.

The numbers Saul presents are from the day of earnings.

I think your calculations are probably right at current evaluations.

Keith

36

Regarding SKX, I think Saul adjusted one or more of the quarter’s EPS for currency gains/losses.

Chris

37

Here is a variant view.

PE Current ROIC PE/ROIC
WAB 25 16 1.6
FB 47 8 5.9
SKX 22 16 1.4
INBK 15 5 3.0
SYNA 16 11 1.5
SNCR 26 5 5.2
CELG 29 19 1.5
BOFI 19 7 2.7
SWKS 21 23 0.9
POL 22 10 2.2
CRTO 38 13 2.2
EPAM 28 14 2.0
PSIX 48 10 4.8
AMBA 38 21 1.8

Why ROIC? Over the long term, earnings growth and ROIC will converge. ROIC is a better predictor of forward earnings growth than past earnings growth is.

5 Likes
38 
Thought I would try to improve the format.

Here is a variant view.

    PE Current ROIC PE/ROIC
WAB    25        16   1.6
FB     47         8   5.9
SKX    22        16   1.4
INBK   15         5   3.0
SYNA   16        11   1.5
SNCR   26         5   5.2
CELG   29        19   1.5
BOFI   19         7   2.7
SWKS   21        23   0.9
POL    22        10   2.2
CRTO   38        13   2.2
EPAM   28        14   2.0
PSIX   48        10   4.8
AMBA   38        21   1.8
3 Likes
39

In the future when creating columns of numbers, use the pre within the < > at the top of the line and a /pre within the < > as the last line. It makes it easier for every one.

pre


    PE Current ROIC PE/ROIC
WAB      25      16    1.6
FB       47       8    5.9
SKX      22      16    1.4
INBK     15       5    3.0
SYNA     16      11    1.5
SNCR     26       5    5.2
CELG     29       9    1.5
BOFI     19       7    2.7
SWKS     21      23    0.9
POL      22      10    2.2
CRTO     38      13    2.2
EPAM     28      14    2.0
PSIX     48      10    4.8
AMBA     38      21    1.8

/pre

http://www.w3schools.com/tags/tag_pre.asp

Quillnpenn-

1 Like
40

So I don’t know what are good values we should be looking for in those metrics (ROIC and PE/ROIC), can someone enlighten me?

I assume we want ROIC high and PE/ROIC low, but what are “good” values for PE/ROIC?