Technical analysis for shorts & longs Message Board

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Strategies & Market Trends : Technical analysis for shorts & longs

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To: Cogito Ergo Sum who wrote (47672)	4/4/2012 3:27:58 PM
From: Johnny Canuck	Read Replies (1) of 69951

I think most of the analysts are looking at cashflow without the capex expenditures as a company can always reduce capex temporarily. I prefer to look at the cashflow with the capex considered as most of these companies need to drill in order to generate the cashflow and a reduction in drilling has an impact on future cashflow. Keep in mind they also need cash to make acquisitions otherwise the EPS per share gets diluted if they are acquiring reserves using shares only. Part of the reason to show an EPS loss is to reduce the amount of corporate taxes. They would rather pay 10 percent on a perferred share or corporate bond as opposed to 30 percent in corporate taxes.

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