SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Non-Tech : C-A-N-S-L-I-M: A Simple, Easy to Use Stock Picking System
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: The Other Analyst who wrote (7)7/11/1999 9:10:00 PM
From: John T.  Read Replies (2) of 42
 
<<<Now, with EPS projections widely available for free, why not use forecasted earnings instead of past earnings?>>>

The CANSLIM system is based on precedent. It emphasizes past and current earnings growth, rather than forecasted earnings, to reduce the risk of mistakes in stock selection. Stock selection based on a proven record of past earnings increases and acceleration is less speculative than selection based on forecasted earnings increases. Forecasted earnings projections are only opinions and opinions are often wrong. The CANSLIM system does not disregard future earnings estimates. In his book, O'Neil states that "the earnings estimates for the next year should also be up a healthy percentage; the greater the percentage, the better."

<<<Why no P/E test? Seems to me, it is not whether the company eps are growing, but what price you are paying relative to that growth.>>>

In his book, O'Neil states "factual analysis of each cycle's winning stocks shows that P/E ratios have very little to do with whether a stock should be bought or not. A stock's P/E ratio is not normally an important cause of the most successful stock moves." In O'Neil's opinion, the percentage increase and acceleration in earnings per share is more important than the level of the stock's P/E ratio. O'Neil cites several cases where stocks with high P/E ratios nevertheless went on to make huge gains in price. In retrospect, the stocks were cheap in spite of their high P/E ratios.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News