February 16, 20160Comments

Market Outlook For 2016

I think we are seeing the start of that process in late 2015 and early 2016. The combination of a slowdown in China, falling energy prices, and the end of zero interest rate policy from the Fed have put markets and the global economy in an interesting state of transition.

by Sam McBride

February 16, 20163Comments

How Buybacks Destroy Shareholder Value

Corporate America has the resources to deploy a large amount of capital and invest in new technologies and innovations that can drive growth. Instead, they just keep spending more and more money on buybacks.

by Sam McBride

January 14, 20160Comments

True Value Investing Still Works

Investors looking for value need to take a holistic approach that measures a company’s ability to deliver economic earnings to investors and quantifies the expectations for future cash flows embedded in its current stock price.

by Sam McBride

January 13, 20160Comments

How Much Quality Is In The “High Quality” ETF?

With the significant drop in the market to start 2016, we can be sure that many investors are looking to shift their portfolios towards higher quality stocks. The challenge is how to define “high-quality” because it is not as straightforward as one might think.

by Sam McBride

January 6, 20160Comments

The Problem With Using Accounting Book Value

For the best financial analysis ratios, look no further. Harvard Business School and MIT Sloan empirically demonstrate the superiority of the data that drives our models and calculations. This paper

by Sam McBride

January 6, 20161Comments

4 Reasons ROE Is Not A Useful Metric For Investors

For the best financial analysis ratios, look no further. Harvard Business School and MIT Sloan empirically demonstrate the superiority of the data that drives our models and calculations. This paper

by Sam McBride

December 17, 20150Comments

Operating Lease Obligation Discount Rate Update

We have recently updated our treatment of Operating Lease Obligations to use a fixed rate as the discount rate for capitalizing the lease obligations and calculating the implied interest for all companies over all history.

by Kyle Guske II, Senior Investment Analyst, MBA

December 16, 20150Comments

The Market Values High ROIC Companies

Last month, Fortune released its list of the top 50 businesspeople of the year. The recognition these CEO’s are receiving shows that the market cares about ROIC, even if many investors aren’t explicitly talking about it.

by Sam McBride

December 2, 20150Comments

High ROIC Stocks Outperformed in 2008

What do these companies have in common? They are the only surviving S&P 500 stocks to rise 10% or more in 2008. In the midst of a collapsing market and the subsequent damage, these seven stocks made good money for investors.

by Sam McBride

November 30, 20152Comments

Why PE Ratios Are Not A Good Measure Of Value

We’ve pointed out the flaws in the price to earnings (PE) ratio many times before. Chief among these flaws is the fact that the accounting earnings used in the ratio are unreliable for many reasons:

by Sam McBride

November 17, 20151Comments

The Dangers of Non-GAAP Earnings

It’s no secret that non-GAAP earnings allow management to directly manipulate their performance metrics. Investors must look past non-GAAP metrics to protect their portfolios. While non-GAAP tricks may provide some short-term boosts to stock prices, eventually reality sets in and the true economics of the business rule the day.

by Kyle Guske II, Senior Investment Analyst, MBA

November 10, 20152Comments

4 Reasons Executives Manipulate Earnings

While most earnings manipulation is not as blatant as the recent Valeant revelations, the fact remains that investors have to be on the lookout for earnings management at all times. To be properly vigilant, it’s important to understand why executives misstate earnings. When you understand the why, you’ll have a better sense of what you need to look for.

by Kyle Guske II, Senior Investment Analyst, MBA

October 29, 20150Comments

Non-GAAP Earnings Boost Executive Pay At The Expense Of Shareholders

Unadjusted GAAP earnings already obfuscate true profits enough, and non-GAAP earnings lead investors even farther astray. In turn, non-GAAP earnings are often used to line the pockets of insiders at the expense of shareholders.

by Sam McBride

October 28, 20150Comments

How To Avoid Dividend Traps

Don’t get burned buying a stock without business operations that cannot support the dividend. Chasing yield could leave you holding the bag once dividends get cut and share prices fall. Find out how to avoid these traps in this week’s webinar “ How To Avoid Dividend Traps.”

by Kyle Guske II, Senior Investment Analyst, MBA

October 21, 20150Comments

4 Dividend Traps To Avoid

Investors need to be careful and make sure they do more research beyond just looking at the dividend yield of a stock. Here are four stocks with high dividends that can burn unwary investors.

by Sam McBride

October 14, 20151Comments

5 Safe Stocks In A Dangerous Market

Five of our long calls over the past year stand out for their impressive returns and continued stability. Investors should take another look at these five stocks that are up 10% or more since our original calls and still earn an Attractive-or-better rating.

by Sam McBride

October 5, 20150Comments

How To Get The Truth About Valuation

How does one make money in the market? The answer to this question depends on whether you are a speculator or an investor. If you are an investor, we may be a good fit for your research process.

by Kyle Guske II, Senior Investment Analyst, MBA

October 1, 20150Comments

5 Sinking Stocks To Avoid In The Market Storm

Markets are getting restless. Valuations are stretched, the global economy is shaky, and after six years of a bull market investors are taking every excuse to sell. Now, more than ever, it’s important to own quality businesses at fair valuations.

by Sam McBride

September 24, 20152Comments

3 Ways Accounting Tricks Can Crash Your Portfolio

Buried in the footnotes and MD&A, you can find where reported expenses understate true costs, red flags for earnings manipulation and significant differences that need to be reconciled when comparing companies. If you want to understand the underlying economics of the company’s business, you have to understand its accounting policies.

by Sam McBride

August 31, 20150Comments

Are “Buy” Ratings Nearly Worthless?

Integrity Research Associates, in a post titled “When a ‘Buy’ Isn’t Really a ‘Buy”, recently highlighted the untrustworthiness of Wall Street stock ratings.

by Kyle Guske II, Senior Investment Analyst, MBA

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