April 4, 20186Comments

Diamonds in the Rough of the Consumer Cyclicals Sector

By leveraging our Robo-Analyst technology to parse and analyze company filings, including the footnotes and MD&A, we have identified companies with multiple years of after-tax profit growth and above average returns on invested capital.

by Kyle Guske II, Senior Investment Analyst, MBA

April 2, 20181Comments

How Much Should Investors Pay for Spotify?

To help investors sort through the confusion, we present three different proposed valuations for Spotify based on three different scenarios of growth and profitability.

by Sam McBride

March 19, 20180Comments

Don’t Buy What “Smart Money” Sells

Is the market hungry enough to justify the expected $7 billion valuation? Or, is this IPO how insiders sell stock and raise capital after the “smart money” (i.e. private equity, hedge funds, etc.) has dried up?

by Kyle Guske II, Senior Investment Analyst, MBA

January 31, 20180Comments

Tax Reform Winners: Companies with Deferred Tax Liabilities

Most public companies should benefit from the new tax law and some of the biggest winners will be companies with large deferred tax liabilities (DTLs).

by Sam McBride

October 5, 20170Comments

Netflix’s Price Increase Signals Original Content Isn’t Enough

We believe the price increase signifies that Netflix’s competitive advantage has been wiped away. In order to justify its massive original content budget, it must raise prices if it is to ever meet the expectations implied by its stock price.

by Kyle Guske II, Senior Investment Analyst, MBA

August 2, 20170Comments

See Us On CNBC Discussing Apple @ 3ET Today

Tune into CNBC on Wednesday, August 2 at 3pm EST. New Constructs CEO, David Trainer, will discuss Apple’s business and its current valuation.

by Kyle Guske II, Senior Investment Analyst, MBA

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

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

May 3, 20160Comments

Identifying Good And Bad Activist Investors

There are some genuinely good examples of shareholder activism out there. In the right context, activist investors hold management accountable and play a beneficial role in the market by ensuring that poor corporate governance and strategy don’t persist.

by Sam McBride

April 12, 20160Comments

Free Cash Flow (FCF): Explanation & Examples

There are many ways to calculate free cash flow. Most approaches are short cuts to our more comprehensive approach to the calculation. The formula for FCF can be seen in Figure 1. For more on FCF, see within.

by Kyle Guske II, Senior Investment Analyst, MBA

April 12, 20160Comments

Economic Earnings: Explanation & Examples

To derive economic earnings, 30+ adjustments must be made to accounting earnings. These adjustments remove items hidden in the footnotes and MD&A of annual filings and close loopholes within GAAP accounting.

by Kyle Guske II, Senior Investment Analyst, MBA

April 12, 20160Comments

Return On Invested Capital (ROIC): Explanation & Examples

The formula (see Figure 1) for calculating ROIC is easy. The hard part is finding all the data, especially from the footnotes and MD&A, required to get NOPAT and Invested Capital right. When we calculate ROIC, 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

January 28, 20160Comments

David Trainer Explains Why Suspended Ratings Are In The Danger Zone

CEO David Trainer sat down with Chuck Jaffe of Money Life and MarketWatch.com to talk about our Danger Zone pick this past week: Danger Zone: Suspended Ratings.

by Kyle Guske II, Senior Investment Analyst, MBA

January 25, 20162Comments

Danger Zone: Suspended Ratings

We suspend our ratings on certain stocks when we feel the company's latest reported financials are no longer reliable or indicative of the risk/reward of the stock. For example, an announcement of an acquisition or spin-off means the current financial statements could change significantly.

by Kyle Guske II, Senior Investment Analyst, MBA

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 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

August 4, 20150Comments

What’s Behind Apple’s Recent Selloff?

New Constructs CEO David Trainer appeared on CNBC's Closing Bell this afternoon to talk about the future potential of Apple.

by Kyle Guske II, Senior Investment Analyst, MBA

March 26, 20153Comments

Ranked: Our Top 10 ETFs

The following is a list of our top 10 ETFs that have over $100 million in assets under management (AUM), and that are not leveraged.

by Kyle Guske II, Senior Investment Analyst, MBA

March 4, 20150Comments

Making a Balance Sheet Useful

We’ve compiled a "Top 11" list of the companies (who have already filed for 2014) with the largest adjustments to their balance sheets across the 11 adjustments we make.

by Kyle Guske II, Senior Investment Analyst, MBA

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