Some new 1ypeg.com tools

Hey folks, over the last week or so I’ve started rolling out to 1ypeg.com the first round of new experimental tools that I’ve been building for myself to help improve my accuracy. I thought I’d mention them just in case anyone else thinks they might find them useful.

I want to emphasize “experimental”: there are very likely bugs, so please always double-check everything and do your own due diligence.

Historical Adjusted P/E Valuation Bands

The first new tool is a chart that shows historical valuation bands, based on Adjusted TTM P/E, over the past few years (assuming enough earnings data has been entered for the company in question). The chart shows the percentage of market days that the stock has spent above various P/E’s over the full timeframe, along with a marker showing where the stock is trading at today. This can help provide some historical context for how the market has tended to value the stock over time compared to how it’s valuing it today.

Now obviously, this is more useful for some stocks than others, and the data should be viewed very critically. For example, the median P/E for Skechers (the halfway point, where the market has traded above it roughly 50% of market days) is 81 because its EPS was coming off such small values, resulting in very high P/E’s. I don’t think anyone would expect the stock to ever trade at that P/E again. But for Skyworks, its median P/E is around 17.7, which is more plausible.

Along the right side of the chart are two additional sets of values: what the share price would look like today at each of those P/E bands given the current TTM EPS, and how much upside (or downside) each of the bands would represent from today’s trading level.

Historical Adjusted P/E Chart

Below the P/E Valuation Bands chart is a basic line chart showing the historical changes in Adjusted P/E over time. This can help complement those P/E bands with some additional context. For example, the P/E of SWKS slowly grew from Jan 2014 to the this past summer and then promptly collapsed to where we’ve seen it recently, whereas SKX has tended to compress over time from its very high P/E’s as earnings grew.

Very Simple Forward Modeling

At the top of the EPS table (just below the log chart) there’s now a “Model Future EPS” button that allows you to model the answers to a few basic questions about what things could look like going forward:

  1. What might things look like next quarter given a quarterly EPS estimate (from management’s guidance, for example)? This will show you what the basic stats will look like: the TTM EPS, YoY growth, 1YPEG, what the new adjusted P/E would be given today’s price, and what the new price would be if the market continued to award today’s P/E to the stock. In addition, a P/E Band chart (like the one mentioned above) will be shown, but this time the share prices shown on the right side will be based on the modeled TTM EPS instead of the current TTM EPS. That can let you see what share prices might look like at the various P/E bands for that modeled EPS. The upside/downside are based on today’s price, giving you a look into what kind of share appreciation (or depreciation) might be possible from today at those various bands.

  2. What might things look like given a future target TTM EPS (like the future $8 EPS goal that SWKS management has laid out)? Because it’s at an arbitrary future point in time, no YoY comparisons or 1YPEGs will be shown, but you can still see what that might look like from a P/E and share price perspective based on today’s values, along with the P/E bands.

  3. What might things look like given some amount of future growth in TTM EPS (e.g., when AMBA has grown TTM EPS by 50%)? Again, no YoY comparisons or 1YPEGs will be shown, but you can see what the growth would do to the P/E given the current share price, or the share price if the current P/E stayed the same, along with the P/E bands.

Neil

83 Likes

Neil, that’s pretty amazing!
Saul

2 Likes

Thanks Neil. Looks very useful. Two questions:

  1. For the % of days in the P/E bands how far back (in days) are you going to do this calculation? Can this range of days be adjusted specifically for each company?

  2. Are you manually entering your adjusted EPS numbers or are you automatically pulling them from some source?

Thanks.

Chris

1 Like

Thanks, Saul, hopefully it’ll be useful.

Chris, the subtitle on each band chart shows how far back it goes for the company in question. Right now it’s a max of 3 years, but will be less if there isn’t 4 years of EPS data (3 years of TTM EPS) entered. The timeframe isn’t adjustable currently.

The adjusted EPS data is still hand-entered – that hasn’t changed. To my knowledge, there is no source for this data (at least not as management presents it), and I’ve looked quite a bit for one.

Neil

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Yes, quite amazing.

The adjusted EPS data is still hand-entered – that hasn’t changed. To my knowledge, there is no source for this data (at least not as management presents it), and I’ve looked quite a bit for one.

Thanks, Neil. Would it be difficult to be able to view the EPS figures that you’re using so that we can check to see if they match our numbers?

Nice contribution Neil. You just keep outdoing yourself.

Andy

1 Like

Would it be difficult to be able to view the EPS figures

Chris, the Adjusted EPS figures are down lower on the page in a table. They’re also editable, if you discover a mistake.

Neil

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That’s great Neil. Now here’s an idea: give people the ability to make an account on the website so they can enter their own data, share data with certain users, get access to your default data, etc. Then everyone’s info is stored. Then you can start advertising on the website and earn some income from your work. Maybe the Fool will even sponsor this and help you get users.

Chris

7 Likes

Chris, why would one want private data?

1 Like

Neil, thank you for this work and your many other excellent contributions.
Drake54

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Chris, why would one want private data?

I was thinking that the YPeg is just a starting point. The good stuff is in the subjective evaluation afterwards. If each had a private area, simple subjective list could be maintained for each stock that passed the YPeg screen. Those, while private, could be aggregated to show absolute scores and relative scores.

These could then be back tested to show the wisdom of the group.

In this way the website would start to become a data generating source rather simply a data gathering source.

It would not happen over night, but I have seen the incremental improvements at Khan Academy really stack up, and a lot of that is based on machine learning.

Gotta go, typing on the IPhone is killing me.

Cheers
Qazulight

2 Likes

Incredible work Neil, thanks!

1 Like

nevercontent added to your Favorite Fools list.

Thank you,
Wendy

1 Like

Neil the new additions are wonderful.

Thank you for all that you do.

–Kevin

2 Likes

Neil, very nice work. Looks great!

…Hey Neil, great stuff…

…is there a list of stocks you’re covering here?..

…thanks…

Hi Huibs,

…is there a list of stocks you’re covering here?

It will work for most domestic stocks. You might just have to add the earnings data if someone else hasn’t already. You can do that by navigating to the stock you want and then clicking the “Add Quarter” button if data (or more data) is needed.

Neil

It will work for most domestic stocks. You might just have to add the earnings data if someone else hasn’t already. You can do that by navigating to the stock you want and then clicking the “Add Quarter” button if data (or more data) is needed.

…thanks, I asked because it seemed to fill with some stocks but not others…

Amazing. I thank you for all of the effort you have put into this. I can’t believe you.

1 Like