Analyzing earnings without reading footnotes from 10-K filings is like driving at night without headlights.
On Thursday, March 7, CEO David Trainer joined Morning Trade Live on the TD Ameritrade Network to show how footnotes reveal highly misleading reported earnings and overvalued stock prices.
This article originally published on March 7, 2019.
Disclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, sector, style, or theme.
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2 replies to "Finding Danger in the Footnotes – TD Ameritrade Network"
Let’s assume I want to identify two companies with the different business model and different capital investment. For example, Apple and Costco. How do you value them using ROIC?
Comparing companies to their peers helps account for the differing levels of capital investment among industries. Many of our long idea and danger zone articles include regression analysis where we compare companies on the basis of ROIC and enterprise value/invested capital. Companies with comparatively higher ROICs and lower EV/ICs than their peers tend to be better investments.