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July 8, 20133Comments

Off-Balance Sheet Debt – Invested Capital Adjustment

Investors who ignore off-balance sheet debt are not holding companies accountable for all of the capital invested in their business. By adding back off-balance sheet debt to invested capital, one can get a true picture of the value that management is creating for shareholders. Diligence pays.

by David Trainer, Founder & CEO

July 3, 20130Comments

July’s Most DANGEROUS Stocks Available to Subscribers Today

Paying customers can access July's 40 Most Dangerous Stocks as of midnight last night.

by David Trainer, Founder & CEO

July 3, 20130Comments

July’s Most Attractive Stocks Available to Subscribers Today

Paying customers can access July’s 40 Most Attractive Stocks as of midnight last night.

by David Trainer, Founder & CEO

July 3, 20134Comments

Off-Balance Sheet Reserves – Invested Capital Adjustment

Reported assets don’t tell the whole story of the capital invested in a business. Accounting rules provide numerous loopholes that companies can exploit to hide issues and obscure the true amount of capital invested in a business over its life.

by David Trainer, Founder & CEO

July 1, 20131Comments

Danger Zone 7/1/13: Callaway Golf (ELY)

ELY is priced for significant profit growth despite declining revenues, increased pressure from competitors, and limited growth potential in the golf equipment industry.

by David Trainer, Founder & CEO

July 1, 20130Comments

Footnotes Adjustments for Earnings & Valuation Diligence

This article details the uniquely rigorous diligence behind each of our ratings on 3000 stocks, 7000 mutual funds and 400 ETFs. It contains reports on all the adjustments we make to convert GAAP data to economic earnings and derive true shareholder value in a discounted cash flow model.

by David Trainer, Founder & CEO

June 28, 20131Comments

Employee Stock Option Costs and Goodwill Amortization – NOPAT Adjustment

NOPAT Adjustments for ESOs and Goodwill Amortization. Converting GAAP data into economic earnings should be part of every investor’s diligence process. Performing detailed analysis of footnotes and the MD&A is part of fulfilling fiduciary responsibilities.

by David Trainer, Founder & CEO

June 25, 20131Comments

McDonald’s Is Still on the Value Menu

The stock market is giving MCD no credit for the company’s proven track record of value creation and strong growth potential. Instead, the market predicts MCD’s profits will permanently drop. I think it is pretty clear the market’s expectations are too low for MCD. Investors should take advantage.

by David Trainer, Founder & CEO

June 25, 20134Comments

Non-Operating Tax Adjustment – NOPAT Adjustment

Without removing the tax impact of non-operating items, one still gets distorted picture of a company’s operating profitability.

by David Trainer, Founder & CEO

June 24, 20132Comments

Growth Appreciation Period (GAP)

The Growth Appreciation Period is the number of years that a business is expected to earn an ROIC greater than WACC on new investments.

by David Trainer, Founder & CEO

June 24, 20130Comments

Free Cash Flow (FCF) and Free Cash Flow Yield

Free cash flow ("FCF") equals NOPAT minus change in Invested Capital.

by David Trainer, Founder & CEO

June 24, 20137Comments

Implied Interest For Operating Leases – NOPAT Adjustment

NOPAT Adjustment for Implied Interest For Operating Leases. Converting GAAP data into economic earnings should be part of every investor’s diligence process. Performing detailed analysis of footnotes and the MD&A is part of fulfilling fiduciary responsibilities.

by David Trainer, Founder & CEO

June 24, 20130Comments

Danger Zone 6/24/13: REITs

Even with this recent price drop, the current valuations of REITs look disconnected from their fundamentals.

by David Trainer, Founder & CEO

June 21, 20134Comments

Income and Loss from Discontinued Operations – NOPAT Adjustment

We remove all income and losses from discontinued operations in calculating operating profit because this income/loss will not recur in the future, and we are looking for the true profitability of the continuing and core operations of a company.

by David Trainer, Founder & CEO

June 20, 20130Comments

How To Avoid the Worst Style Mutual Funds

Picking from the multitude of style mutual funds is a daunting task. In any given style there may be as many as 979 different mutual funds, and there are at least 6100 mutual funds across all styles.

by David Trainer, Founder & CEO

June 17, 20134Comments

Change in Total Reserves – NOPAT Adjustment

Reported earnings don’t tell the whole story of a company’s profits. They are based on accounting rules designed for debt investors, not equity investors, and are manipulated by companies to manage earnings. Only economic earnings provide a complete and unadulterated measure of profitability.

by David Trainer, Founder & CEO

June 17, 20131Comments

Danger Zone 6/17/13: Citigroup (C)

As the market bulls continue to look to rising interest rates as a sign of future strength for Citi, they ignore the fundamentals of the market and of Citi’s weak profit history.

by David Trainer, Founder & CEO

June 17, 20130Comments

Non-Operating Income Hidden in Operating Earnings – NOPAT Adjustment

Non-operating items in operating income are unusual gains that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring income items distort GAAP numbers by artificially raising operating earnings.

by David Trainer, Founder & CEO

June 14, 20131Comments

How to Find the Best Style Mutual Funds

There are at least 980 different large cap blend mutual funds and at least 6100 mutual funds across all styles. Do investors need that many choices? How different can these thousands of mutual funds be?

by David Trainer, Founder & CEO

June 12, 20130Comments

June’s Most DANGEROUS Stocks Available to the Public

New Constructs released June’s Most Dangerous Stocks report to the public today.

by David Trainer, Founder & CEO

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