Fundamental analysis 20?
Value investing and earnings potential?
Value investing is related more to assets valuation. Earnings potential is beyond value investing concepts. It deals with capital leverage, relative financial risks( not beta), technology direction and potential, market acceptance of products, total market potential, costs, automation, efficiency, quality control, ETC.
The immediate earnings can give you a quick evaluation of the earnings potential. Balance sheet and profit and loss statement will show the growth of revenue(market of products and services), costs, and capital leverage. Cutting costs will add to earnings potentials. Increasing market shares will increase earnings potentials.
Less obvious is the efficiency, quality control, technology obsolescense, and automated machines to increase productivity. Easiest to find is in the write offs. If non-recurring charges offsetted earnings, the potential earnings can be assessed immediately. |
