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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Rock Fish who wrote (1872)	10/27/1997 12:34:00 AM
From: Greg Luke	Respond to of 42834

You have a good point in general. I have been trying to figure out, that is, calculate the P/E of a company. To my simple brain, you take the number of shares issued, and multiply by the current stock price. That number has to be the "Price"..actually the market value is a better term. Then, I go to the earnings. Most of this stuff is laid out pretty well on quote.yahoo.com I look for the quarterly earnings. Then you have to figure out how many quarters they are reporting. But, that can be determined if you look at the previous years earnings. If I do this for Intel, I get a P/E ratio of just over 20. (Which is very low compared to most of the high flying stocks). Yet, I know that other factors can mess up earnings. Depreciation on new equipment will make a huge dent into earnings if use the IRS rules. Interest paid on loans, lawsuits settled and whatever else you can imagine are, in fact, "expenses" But this number does not really reflect the true earnings.. Then you get the term "operating earnings"; which must be an adjusted earnings number to reflect non-operating expenses. Now I know that the annual financial statements have all this stuff broken down, but certainly not on a quarterly earnings report. It is a puzzlement. Until I figure it out, I guess I will have to use either the reported P/E figure and the companies "quarterly earnings"...whatever that number includes or excludes! But I agree it is a good question, and Bob should have used it as an opportunity to teach rather than lift his perch a little higher. Luke

To: Rock Fish who wrote (1872)	10/28/1997 2:26:00 AM
From: watcher	Respond to of 42834

Hmmmm.... What with the discussion previously about Bob possibly retiring at the end of the year...and his "tease" of operation earnings...and some of the other things...I'm wondering if some of this behavior isn't a means of "disconnecting" with his audience in preparation for his retirement. But...I've frequently heard that in reading financial reports, God is in the details (i.e., the footnotes). I could be mistaken, but I would think that it should not be that difficult to determine non-recurrent earnings data (sale of divisions; tax surcharge; etc., .etc. -- causes are legion). Maybe I'm missing something...I mean, it may not be as refined as Bob's, but I bet it would get you some ways... What I think is interesting is that another part of price to earnings ratios is the number of shares outstanding. This can vary...!!! One of the stocks I own (RDUS) underwent considerable dilution earlier this year (before I owned it). Yet many folks might just look at price & volume data on the charts...saying...gee, it was in worse financial condition earlier and the stock price was ..mm maybe 4x higher...so surely the stock must be _very_ undervalued...I think it may be undervalued...but not simply because of the previous price action... watcher