December 4, 20170Comments

No Recipe for Success: Low Margins in a Competitive Industry

This stock’s valuation has not adjusted to reflect new competitive pressures or the rapidly deteriorating fundamentals.

by Kyle Guske II, Senior Investment Analyst, MBA

September 25, 20170Comments

Failure to Adapt Dooms This Stock

This firm’s late transition to the cloud based software market has left it with falling profits, lagging margins, and a significantly overvalued stock.

by Kyle Guske II, Senior Investment Analyst, MBA

September 14, 20170Comments

Alpha-generating Forensic Accounting Examples

New Constructs’ proprietary forensic accounting research empowers investors to identify alpha-generating investment ideas more efficiently than traditional manual approaches. This report highlights investment ideas based on insights our research technology automatically provides on a firm’s true return on invested capital (ROIC) and economic earnings.

by Kyle Guske II, Senior Investment Analyst, MBA

April 3, 20170Comments

Danger Zone: Verint Systems (VRNT)

This firm has seen seen margins contract as early success brought more competition. To try and offset competitors taking market share, the firm made numerous shareholder value-destroying acquisitions. Now the stock is pricing in aggressively optimistic improvements in revenue growth and profit margins.

by Kyle Guske II, Senior Investment Analyst, MBA

March 6, 20170Comments

Danger Zone: Tableau Software (DATA)

This stock is on the upswing and is up 23% year-to-date, while the S&P is up just 6%. The fundamentals of the business don’t justify this price move. In fact, negative margins, strong competition, and the overvalued stock price land Tableau Software (DATA) in the Danger Zone this week.

by Kyle Guske II, Senior Investment Analyst, MBA

October 6, 20160Comments

Why Suitors Are Leaving Twitter at the Altar – Danger Zone

Today’s news that Alphabet, Apple, and Disney are unlikely to bid for Twitter should come as no surprise. We think these companies (and many investors) are doing the same work we have done and simply cannot stomach paying anywhere close to Twitter’s current price.

by Kyle Guske II, Senior Investment Analyst, MBA

August 15, 20160Comments

Danger Zone: 8×8 (EGHT)

This week’s Danger Zone is a company that claims consistent profitability and continued success, despite years of shareholder value destruction. Misleading non-GAAP results, large losses, and an overvalued stock price land 8x8 in the Danger Zone.

by Kyle Guske II, Senior Investment Analyst, MBA

July 19, 20160Comments

Why Companies Overpay For Acquisitions

Overpriced acquisitions are far from a new phenomenon, but they’ve been especially prevalent in recent months. As a result, we’ve gathered some ideas about the various reasons companies ignore the evidence and continue to overpay for acquisitions.

by Sam McBride

June 13, 20160Comments

Microsoft Vastly Overpays For LinkedIn

Our models show that, even with the most optimistic forecasts, over $20 billion, or $2.60 per MSFT share, of the $26.2 billion purchase is an overpayment and a direct destruction of value for MSFT shareholders.

by Kyle Guske II, Senior Investment Analyst, MBA

June 13, 20160Comments

Danger Zone: Interactive Intelligence (ININ)

But what happens when a once profitable company makes the transition to the cloud and has become largely unprofitable? That company, Interactive Intelligence (ININ) is in the Danger Zone this week.

by Kyle Guske II, Senior Investment Analyst, MBA

June 6, 20162Comments

Danger Zone: Imperva Inc. (IMPV)

This week’s Danger Zone pick has since rebounded and might have investors thinking now is the time to buy. Unfortunately, the fundamentals of this company reveal a different story. Growing losses, misleading non-GAAP metrics, and significant competition land Imperva Inc. (IMPV) in the Danger Zone this week.

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 11, 20160Comments

Danger Zone: Blackbaud Inc. (BLKB)

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.

by Kyle Guske II, Senior Investment Analyst, MBA

February 18, 20160Comments

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

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.

by David Trainer, Founder & CEO

December 14, 20151Comments

Danger Zone: Qlik Technologies (QLIK)

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.

by Kyle Guske II, Senior Investment Analyst, MBA

October 22, 20150Comments

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.

by Blaine Skaggs

October 12, 20152Comments

Danger Zone: Proofpoint Inc. (PFPT)

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.

by Kyle Guske II, Senior Investment Analyst, MBA

October 5, 20150Comments

Danger Zone: Marketo (MKTO)

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.

by Kyle Guske II, Senior Investment Analyst, MBA

July 14, 20150Comments

3Q15 Style Ratings for ETFs & Mutual Funds

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.

by Max Lee

July 7, 20153Comments

Ignore the Hype: Splunk Remains Overvalued

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.

by Max Lee

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