OK, great about the screen. I was just curious. I'm now in a hunt for criteria to try to build some screen that would return potential value candidates that could be suitable for further research. Relying on criteria implies a belief in efficient market theory - why does the market apply a different standard with regards to profitability and cost of capital to companies like Amazon and Tesla? Recent interest rates have effected investor and management behavior leading to equity prices which seem high. Companies need earnings to survive, do you want to measure earnings rate of change, the reason for the change, how management allocates the earnings, or the effectiveness of managements allocation. Investopedia.com could offer you some ideas.
I just try to learn new things and keep improving the strength of the portfolio while trying to achieve the objectives of my investment plan. At this time, my concerns are greater with regard to my investment plan than the holdings in the portfolio.
"Annualized cash flow" - this is probably something you need to adjust manually, correct? Or is it simply year over year number from cash flow statements? If you have some simple formula that only uses numbers from financial statements without the need for manually adjusting some numbers, and if it is not a secret, send me criteria and I can try (over long time, my old brain is slow learner) to get customized screen working. I just take the company's reported operating cash flow for a quarter and annualize it forward for a quick calculation. If I wanted to look at a company closely though and verify the cash flow they reported I would build my own spreadsheet for the company. Inputs supplied by various companies are not always consistent however and I don't know if US companies have the same reporting style as Canadian companies. Either way it is just a measurement at a point in time.
p.s.
I hear you about cash flow to debt ratio. I had MHR in my portfolio a while ago.... ouch!Investing world can now float in a huge debt all it wants.
I was watching a financial news channel the other day where a guest was talking about the recent drop in DHX Media and mentioning how companies leverage up to make an acquisition and the expected cash flow doesn't happen and the stock price crashes - he still liked the content they had and would keep an eye on the stock. This drop in cash flow is similar to what happens to oil companies when the oil price drops significantly.
Debt management is still a concern and the reason my focus is on my investment plan, I need to adjust as necessary. |
