Rainier, nice to have you join us.
The book on cash flow analysis I would recommend is the one I mentioned in my opening post: Kenneth S. Hackel & Joshua Livnet: "Cash Flow and Security Analysis", Irwin Professional Publishing, 2nd ed., 1996. It provides the most comprehensive and most up-to-date treatment of the subject that I personally know of.
Incidentally, one of the chapters in the book is on (operating) cash flow analysis, and gives the reasons why H&L think that is not the best way to evaluate stocks. (For one thing, it does not take into account either capital expenditures or debt.) In short, they consider FREE cash flow analysis as a very distinct (and, in their opinion, a very superior) method.
As for QSDNF, I couldn't find any data on it, except on the Morningstar site. And that data isn't up to date. That said, the situation does not look encouraging. From 1993 to 1995, QSDNF had not just negative free cash flow, but what is more serious -- negative OPERATING cash flow -- and it was getting worse every year. 1993: -0.3; 1994; -1.3; 1995: -2.3. H&L say -- never buy a stock that has had negative OPERATING cash flow for even one year during the past four years. (Unless, that is, there was a major one-time capital expense that is likely to pay itself off by increasing profitability very soon.)
Furthermore, QSDNF has evidently not turned a profit since 1992 (here Morningstar does have data up to 6/97). In this respect, 1995 was the worst year, so perhaps a turnaround is in the making. However, I personally wouldn't bet on it.(I'm a Nervous Nellie where stocks like this one are concerned.)
Can you tell us why you like QSDNF? This is not meant as an invidious question. It's just that I may be missing something here. Thanks.
jbe |
