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Investing 101

Overstated Earnings
November 15, 20230Comments

Equity Model Adjustments For Real Estate Investment Trust (REIT) Companies

This report explains the differences in our models for real estate investment trust (REIT) companies compared to standard industrial company models.
by David Trainer, Founder & CEO
August 29, 20230Comments

Equity Model Adjustments for Financial vs. Non-Financial Companies

This report explains why certain calculations in our company valuation models are different for financial companies.
by David Trainer, Founder & CEO
February 15, 20220Comments

To Capitalize Expenses or Not? It Doesn’t Matter.

Buyer beware, capitalizing expenses is, largely, a fool’s errand that has no effect on free cash flow.
by Kyle Guske II, Senior Investment Analyst, MBA
December 14, 20210Comments

How We Calculate Income Tax Distortion

We remove the tax impact of non-recurring items to calculate a company’s true cash taxes to provide a clearer picture of a company’s profitability.
by Kyle Guske II, Senior Investment Analyst, MBA
Core v. GAAP Abridged
January 16, 20200Comments

Getting Core Earnings Right

Though most investors take for granted that corporate managers fudge their earnings, there’s never been any empirical data and evidence to prove it – until now.
by Kyle Guske II, Senior Investment Analyst, MBA
Net Operating Profit After Tax (NOPAT)
November 19, 20190Comments

Net Operating Profit After-Tax (NOPAT) & NOPAT Margin

When we calculate NOPAT, we make numerous adjustments to close accounting loopholes and ensure apples-to-apples comparability across thousands of companies.
by Kyle Guske II, Senior Investment Analyst, MBA
October 1, 20190Comments

EBITDA and Adjusted EBITDA

Adjusted EBITDA/EBITA is a more accurate and comparable calculation of companies’ pre-tax cash earnings.
by Sam McBride
September 16, 20190Comments

ROIC Drivers – a More Rigorous Dupont Analysis

Breaking ROIC into NOPAT Margin and Average Invested Capital Turns provides insights into the operating vs. capital efficiency of businesses.
by Kyle Guske II, Senior Investment Analyst, MBA
Free Cash Flow & FCF Yield
September 9, 20192Comments

Free Cash Flow and FCF Yield

As with all things in life, building a solid investment strategy around Free Cash Flow (FCF) is not as simple as it may seem. Here are 3 rules to follow.
by Sam McBride
Danger Zone
December 10, 20181Comments

How Price to Book Misleads Investors

Investors that still rely on P/B (including anyone in a value index fund) are in the Danger Zone.
by Sam McBride
Danger Zone
November 19, 20182Comments

Don’t Get Misled by Return on Equity (ROE)

ROE lacks the necessary analytical rigor to support diligent investment decisions.
by Kyle Guske II, Senior Investment Analyst, MBA
Danger Zone
November 12, 20180Comments

P/E Ratios Are Misleading… Especially Right Now

P/E ratios are not a good measure of value, and that’s especially true this year. Investors that rely on P/E ratios are in the Danger Zone.
by Sam McBride
Invested Capital
May 18, 20183Comments

Average Invested Capital: Explanation and Examples

In our calculation of ROIC, we use a time-weighted average invested capital, to most accurately capture the capital available to a business that can be used to generate NOPAT over the course of a year.
by Kyle Guske II, Senior Investment Analyst, MBA
New Constructs
October 12, 20170Comments

Invested Capital Turns: Explanation and Examples

Invested capital turns are an important consideration in the analysis of return on invested capital (ROIC) and a key measure of balance sheet efficiency.
by Kyle Guske II, Senior Investment Analyst, MBA
New Constructs
May 30, 20170Comments

3-Year Average Return on Invested Capital: Explanation & Examples

3-year average return on invested capital (seen in Figure 1) provides additional insights into a firm’s track record of prudent capital management.
by Kyle Guske II, Senior Investment Analyst, MBA
New Constructs
May 10, 20170Comments

GAAP-Based Return on Invested Capital: Explanation & Examples

GAAP-based ROIC is based on a simplified after-tax profit (NOPAT) and invested capital that can easily be calculated using only the income statement and balance sheet.
by Kyle Guske II, Senior Investment Analyst, MBA
New Constructs
December 16, 20160Comments

Weighted Average Cost of Capital (WACC) Update

We recently discovered an opportunity to improve upon our cost of capital (WACC) calculations for the 5,000+ models we manage for clients.
by Sam McBride
December 1, 20160Comments

Value Investing 2.0 & The Technology Behind New Constructs

New Constructs was founded to build best valuation models in the business across thousands of securities. To build the best models, we had to create our own data collection technology.
by Kyle Guske II, Senior Investment Analyst, MBA
June 10, 20160Comments

Building The Best Model Portfolio: Executive Compensation Aligned With ROIC Webinar

In this webinar, CEO David Trainer, will discuss the importance of return on invested capital (ROIC), why linking executive compensation to ROIC is beneficial, and how New Constructs' tools can be used to create the best Model Portfolio.
by Kyle Guske II, Senior Investment Analyst, MBA
April 29, 20160Comments

FinTech: Disruptive Tech To Parse SEC Filings & Build Valuation Models Webinar

In this webinar, CEO David Trainer, will discuss our propriety research system, what makes us better, and how we can help protect investors, directors, and auditors.
by Kyle Guske II, Senior Investment Analyst, MBA
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