Gorilla and King Portfolio Candidates Message Board

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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Seeker of Truth who wrote (30575)	8/28/2000 12:13:15 AM
From: sditto	Read Replies (2) of 54805

<<The problem I have with PEG or any other metric used alone as a proxy for competitive advantage is that the underlying numbers can be manipulated.>> The problem with Net Margin calculations is they are subject to one-time charges against Net Income (e.g., acquisition costs, investment gains, etc.) which make it difficult to tell what is happening on an operating basis. The better number to use is pro forma Net Margin which is a little harder to come by since it requires scrutiny of the 10Q. All of the major data reporting services use reported numbers (probably because arriving at the pro forma number often requires discretion) which throws off automated screening tools and causes me to use a lower threshold when doing first pass screening. In Q200 and Q300 CSCO actually had pro forma Net Margins of almost 21%. Check out this report for info on some of the other measures at boards.fool.com

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