Some Questions on Calculation of the FA Indicators

[Mystique]

Hi all,

i hope seniors and fellow graduates can enlighten me on the following calculation.

Question 1

I was going through various annual reports of some companies and tried calculating the EPS but it doesn't tally with the figure provided on Share Investors.

EPS = Earnings/ No. of shares issued.

Earnings should be shares attributed to owners of the company, correct?

Shares issued is number of ordinary shares issued, correct?

Question 2

For calculation of PEG, do we use the figures for 1 accounting year or 2 accounting years?

Eg, 2011 June quarter 1- 2012 March quarter 4. Or 2011 March quarter 4- 2012 March quarter 4.

Question 3

For commodities stocks, do we look at PE, PEG, Net profit margin, Interest cover, Debt to Equity ratio?

Thank you.

[dragonhart2]

hi,

try my best(feel free to add on...i got a lot learn too ):

1. does EPS u calculated tally with the ones in the Annual report? For quaterly report, EPS is only for that quarter. i don't now Share investor calculated their figures.

2. In the games section of "Secrets of making money in stocks", there are some examples....Dennis has calculated for us....we can practise by revising those/calculate yourself the various ratios...that's how i figure out where to pluck out the figures, what divide by what........PEG is a PE/growth for that year (if i am not wrong)...

e.g Company A: PE ratio is 25x....and growth rate is 20%= 1.25...
and if Company B: PE is 10x and growth rate is 15%= 0.667.

it is a way to assess if the current price is justified by the growth rate.....so company B is a better bargain...tio bo?
so this is a complement to PE ratio itself...which doesn't tell u the growth potential...hence we can make better decision.

3. i guess we look at all the ratios mentioned in the seminar but Price/NAV is not used for commodities stock....there are quite many commodities counters...so u can do "peer analysis (use Net profit before tax for fair comparison in case some company got tax exemption)" to determine which company is stonger financially....be careful of PE as when PE is low....means CPO (crude palm oil) prices is peaking....so after a peak is what??? a slump we are seeing now.....so low PE doesn't mean buy..... that's what happened to me before attending the seminars.

cheers,
jason.

Hi all,

i hope seniors and fellow graduates can enlighten me on the following calculation.

Question 1

I was going through various annual reports of some companies and tried calculating the EPS but it doesn't tally with the figure provided on Share Investors.

EPS = Earnings/ No. of shares issued.

Earnings should be shares attributed to owners of the company, correct?

Shares issued is number of ordinary shares issued, correct?

Question 2

For calculation of PEG, do we use the figures for 1 accounting year or 2 accounting years?

Eg, 2011 June quarter 1- 2012 March quarter 4. Or 2011 March quarter 4- 2012 March quarter 4.

Question 3

For commodities stocks, do we look at PE, PEG, Net profit margin, Interest cover, Debt to Equity ratio?

Thank you.

[Mystique]

Hi Jason,

thanks for the clarification. I'll go through the game notes again to see whether i can tally the figures. If i can't get the calculation right, i may be deceived by the figures presented in the annual report as Dennis said, it is GAAP.

I've taken a look at this stock- Sakari Resources. It is a commodity stock and by applying Dennis rule, the PE, PEG, Net profit margin, interest cover and Debt to Equity ratio indicate that this is a buy stock. Looking at the chart using simple ma- 20 and 50, it seems to meet the criteria too. 20 and 50 is intersecting and the share price is just above these ma.

What's your view on this stock?

Thanks!

[louiskst]

Hi

EPS = earning attributed to common shareholder / average no. of common shares issued for the year

earning attributed to common shareholder = (net profit - preferred share dividend)

Average no. of share issued usually can be found in the financial report under changes of equity statement

louiskst

[dragonhart2]

hi,

what's the duration u plot? i usually plot a 1 yr chart and then apply the "moving average crossover" indicator (20 vs 50 days) in Philip Poems Advance Chart....it was a down trend stock(dropped fr 2.00 to 1.16 and rebounded)....the last few days, it seems like making a reversal....btw it is CD with 9.75 cents! dividend..right?..the recent quarter report turns out better than expected....which is why it is being bidded up now. ...it used to be called Strait Asia Resources...mainly dealing with coal trading/mining...Tio bo?

if the price managed to cut the 20 dMA (with above average vol, pls check first hor) and didn't drop back in a couple of days..it is a BUY.

u might want to put this discussion under "discussing specific stocks" don't be shy...go post there....

pls keep up the good work and keep learning/sharing. As what Dennis said,"The more u share/give, the more u get", "Give and u shall receive'....
take all comments(positive or negative) as feedbacks to make u a better investor!

btw can u share the ratios for FA?

cheers,
jason.

Hi Jason,

thanks for the clarification. I'll go through the game notes again to see whether i can tally the figures. If i can't get the calculation right, i may be deceived by the figures presented in the annual report as Dennis said, it is GAAP.

I've taken a look at this stock- Sakari Resources. It is a commodity stock and by applying Dennis rule, the PE, PEG, Net profit margin, interest cover and Debt to Equity ratio indicate that this is a buy stock. Looking at the chart using simple ma- 20 and 50, it seems to meet the criteria too. 20 and 50 is intersecting and the share price is just above these ma.

What's your view on this stock?

Thanks!

[Mystique]

Another question, for quarterly reports, is it possible to calculate EPS? If possible, how to calculate?

Thanks!

[dragonhart2]

hi,

ya...EPS for each quarter is reported in quarterly report......net profit for that quarter divided by total number of shares......But u can't use this to value the stock....coz we should use the full year earnings...(estimate around 4x of each quarter)

note: for NAV also changes (sales or acquisition) for quarter but it is calculated based on Total assest-total liabilities....so cannot x4.

cheers,
jason.

Another question, for quarterly reports, is it possible to calculate EPS? If possible, how to calculate?

Thanks!

[kolch]

Hi Jason:

I understand that when we calculate interest cover, we need these two parameters: net profit and interest expenses.

Is it meaningful to calculate interest cover based on the quarter report result or we just wait for the full year report for the calculation?

Also, may I know how does a company distribute the interest expenses throughout a year?

Cheers!
Kok Leong

[dragonhart2]

hi,

i guess most of the financial ratios we learnt in the Stocks seminars are on a yearly basis....so more meaningful to use full year report and analyse for past 5 years.

we don't know when the company will incur interest cost....so using quarterly figures may not paint the real picture.

For quarterly report, i look at net-profit minus extra-ordinary items, cash flow, changes in inventory etc and compare with previous quarters....basically, look for Red Flag e.g negative cash flow, revenue up but profit down, build up of inventory, etc

just sharing what i know.

cheer,
jason.

Hi Jason:

I understand that when we calculate interest cover, we need these two parameters: net profit and interest expenses.

Is it meaningful to calculate interest cover based on the quarter report result or we just wait for the full year report for the calculation?

Also, may I know how does a company distribute the interest expenses throughout a year?

Cheers!
Kok Leong

[kolch]

Hi Jason:

Thanks for sharing.

Cheers!
Kok Leong