What is the theoretical fair value of a stock with negative Earnings Per Share?

[Joab]

Quote from christianhgross:

One of my measures is sales. It is rather important for me.

With sales you cannot hide, tweak or twiddle the number. Either you sold this or not. Yes you can defer, but at the end of the day you either sold something or not.

A company that has increasing sales, but decreasing profits deserves a second look. However a company that has increasing EPS and decreasing sales is a warning sign.

Think of it as follows. You are company and your sales are going down, and in response you start cutting staff boosting EPS. Though is that a good idea for the long term health of the company? Answer no...

For the financials I am looking at sales and cost of sales. For some companies it looks good and others not so good.

Good stuff

 

[Don Bright]

Quote from crgarcia:

Like many financials?

"Theoretical Value" applies only to derivatives such as options. TV is based on volatility, interest rates, and time until expiration.

Book value applies to equities, and as mentioned prior here, you really need to spend some time going over the financials. Even after doing so, you can be blindsided with missed earnings etc.

We have full time research going on to determine valuations in over 1000 pairs of stocks so that we can hopefully be long the "right" stock and short the stock of lesser value. Not an exact science by any means, but it's pretty much the best that can be done.

FWIW,

Don

 

[nutmeg]

With sales you cannot hide, tweak or twiddle the number.
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You can tweak or twiddle every other number. HD vendor return program fiasco is an example. Periods of inflation, imo makes it easier to tweak and twiddle cost of goods.