What statistic could replace earnings in the "Amazon era?"

[newwurldmn]

That's correct. Looking at individual companies would be considered micro-.

I am confused. What are you trying to do? In an earlier post you said the question was targeted towards macro economics.

 

[farmerjohn1324]

I am confused. What are you trying to do? In an earlier post you said the question was targeted towards macro economics.

The original question was just looking for a statistic of individual companies. But then the thread got sidetracked into a debate about FA vs. TA.

 

[vanzandt]

By "Amazon era," I mean that companies can now have zero or little earnings and still be desirable companies. This is only if they are spending their potential earnings on reinvestment in the company to increase future earnings.

What statistic should I be looking for on the financial statements? Earnings plus CAPEX? Am I on the right track?

Didn't read the whole thread so someone might have mentioned this, but a lot of VC's use 'the rule of 40' on these high fliers.
Take the net profit margin and add it to the percentage of annual revenue growth. If it comes in over 40, its at least worth a look.

 

[taowave]

So companies showing negative net income with high sales growth are on the radar?

 

[vanzandt]

So companies showing negative net income with high sales growth are on the radar?

Not net income, net margin. That's why software companies do so well, their margins are very high. Once they break even otherwise, its pure profit. CRM was a good example of this.

 

[taowave]

Net margin is a derivative of Net Income vs Revenue...
What I am saying is you can have a company that loses money,hence Neg Net Income,hence Neg Net Margin,byt still have explosive sales growth...

Im not disagreeing with you,I am pointing out that you can have companies with neg EPS,burning cash but putting up big Rev growth