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.

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Danger Zone: Blackbaud Inc. (BLKB)

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Our call on Valeant (VRX) showed how dangerous it is to trust non-GAAP earnings because they cannot be used to cover true cash costs. For these reasons and more, Blackbaud Inc. (BLKB) lands in the Danger Zone this week.

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Open Letter to Larry Ellison: How To Boost Oracle’s Value By $65 Billion

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Thesis: Management can boost the market value of ORCL in the amounts provided by aligning the firm’s strategy and performance compensation with real cash flows or what we call return on invested capital.

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Danger Zone: Qlik Technologies (QLIK)

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Despite deteriorating margins, lack of competitive advantage, and a sky-high valuation, Qlik Technologies (QLIK: $31/share) is up nearly 33% over the past two years and finds itself in the Danger Zone this week.

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The Best and Worst of the All Cap Value Style 4Q15

The All Cap Value style ranks fourth out of the twelve fund styles as detailed in our 4Q15 Style Ratings for ETFs and Mutual Funds report. Last quarter, the All Cap Value style ranked fifth. It gets our Neutral rating.

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Danger Zone: Proofpoint Inc. (PFPT)

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As hacks or data breaches seem to occur almost daily, the cyber security sector is receiving significant attention across the globe. When we focus on fundamentals and cut through the “sector theme” noise, we find some weak links in the cyber security industry. This week’s Danger Zone is one of those weak links.

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Danger Zone: Marketo (MKTO)

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This week we’ve identified another highflying cloud company that exhibits many of the problematic traits we saw in DWRE and SPLK. Revenue growth can only support a stock for so long and this week’s Danger Zone stock, Marketo (MKTO) has plenty of room to fall.

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3Q15 Style Ratings for ETFs & Mutual Funds

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At the beginning of the third quarter of 2015, only the Large Cap Value and Large Cap Blend styles earn an Attractive-or-better rating. Our style ratings are based on the aggregation of our fund ratings for every ETF and mutual fund in each style.

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Ignore the Hype: Splunk Remains Overvalued

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In early 2012, Splunk Inc. burst onto the scene with one of the biggest IPOs of the year. Since then, the stock price has ridden the hype and is up more than 320%. This price increase should raise serious concerns for astute investors.

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Get This Cash Cow at a Discount

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Strong business fundamentals and low valuations are key ingredients in the overall evaluation of investments. This week’s stock pick of the week brings high profitability and a compelling valuation to the table.

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Best Stocks in the Dow Jones Industrial Average

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Last week, we wrote about the riskiest stocks in the Dow Jones Industrial Average. We thought we’d be remiss to not mention our favorite stocks in the index as well. Not all of the blue chips are created equal, and the following are what we consider to be the most attractive investment opportunities in the Dow at the moment.

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Ranked: Our Top 10 ETFs

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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.

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A Turnaround Years in the Making

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This week’s hot stock has almost been written off by many market pundits. As commonly happens, media coverage tends to overreact to bad news, and those reactions can begin to drown out any positive news.

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The Best Large Cap Value Stocks in the Market

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The Large Cap Value style ranks second out of the 12 styles for the first quarter of 2015 and receives our Neutral rating. The Large Cap Value style as a whole outperformed the Russell 3000 in 2014

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Danger Zone: Price to Earnings Ratios

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The vast majority of evidence suggests that P/E ratios are an unreliable way to measure the true value of stocks.

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Do Microsoft Bulls Have A Convincing Case?

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MSFT currently earns our Neutral rating, but if new CEO Satya Nadella can halt the company’s declining return on invested capital (ROIC), the stock’s valuation is cheap enough to make it intriguing.

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10 Wonderful Companies That Are Bad Stocks

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Sometimes, a great company can actually be a risky stock when it gets significantly overvalued.

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Apple’s Declining Advantage is Undeniable

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Apple cannot have pricing power and market share at the same time. No one can for an extended period of time. The problem with AAPL is that it is priced for the company to achieve market share penetration and growth at high prices. The reality is that the quality of Apple products versus competitors is declining. Prices will have to come down just to maintain market share.

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Danger Zone: salesforce.com (CRM)

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There are too many competitors out there for CRM to grow revenue and expand margins simultaneously to the extent that the market valuation already implies. Too much downside risk is in this stock.

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Danger Zone 11/19/13: Netflix (NFLX)

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Netflix (NFLX) is in the Danger Zone this week. The DVD subscription and streaming video service has changed the way people watch movies and TV shows. However, its current valuation is out of touch with reasonable expectations for future cash flows and profitability.

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