I am trying to understand the difference between the Buffettology EPS Growth and Sustainable Growth screens you track at the Web site. Both passing company lists have the exact same column headings.
—J.S. via Web Inquiry
CI Editor’s Response: The two Buffettology screens we track on AAII.com are based on the book from Mary Buffett and David Clark called “Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World’s Most Famous Investor.” Buffett bases his stock investments on a company’s intrinsic value, where value is measured by the ability to generate earnings and dividends over the years. He targets successful businesses—those with expanding intrinsic values—which he seeks to buy at a price that makes economic sense. His goal is to generate an annual rate of return of at least 15% for at least five or 10 years. The two AAII Buffettology screens attempt to identify “consumer monopolies”—companies selling products for which there is no effective competitor, either due to a patent or brand name or similar intangible that makes the product unique. Once these companies have been identified, the screens attempt to arrive at a “fair value” for the stock. These fair values are generated by forecasting future earnings (and dividends) by growing them forward using either the historical earnings growth rate or the company’s sustainable growth rate. You will see the difference in the approaches by the stocks that pass each screen. For a list of the filters used for each screen, go to the Screening Criteria link.
For more information on the Buffettology screens, as well as a useful valuation spreadsheet, please see the Spreadsheet Corner segment beginning on page 1 of this issue.
I have just completed a video on Investor/RT’s functionality regarding analyzing and scanning daily and fundamental data, which you can get for free from Yahoo!. The video is available at www.screencast.com/t/btKYvzCL.
—Chad Payne via Web Inquiry Linn Software, Inc.
CI Editor’s Response: Thank you for the information, Chad. For readers who are interested in technical analysis, Investor/RT was an Editor’s Top Pick in the March/April 2008 CI comparison of technical analysis and charting programs. This article is available on-line at the Computerized Investing Web site (www.computerizedinvesting.com). Choose the issue date from the Past CI Issues drop-down box on the right side.
The Wall Street Journal stopped its daily report of earnings releases, which you used to be able to download in spreadsheet format. Is this information available elsewhere on the Internet?
—G.F.M. via Web Inquiry
CI Editor’s Response: We found several Web sites offering listings of quarterly earnings announcements, although perhaps not in the same format you were used to at WSJ.com. Briefing.com’s free Investor service provides an earnings calendar with company earnings announcements for today and yesterday. The listing offers the actual earnings number, the First Call consensus earnings estimate figure, the prior year’s earnings per share and the year-over-year revenue growth. This is available at briefing.com/Investor/Private/Calendars/EarningsCalendar.htm. Yahoo! Finance has a listing of daily earnings surprises, breaking companies down by those that exceeded, met, and fell short of analyst expectations, along with the percentage surprise, reported earnings and the consensus EPS. This is available for free at biz.yahoo.com/z/extreme.html. Lastly, The Wall Street Journal Market Data Center (online.wsj.com/mdc/public/page/marketsdata.html) still provides a list of earning surprises for the last completed trading day. You get the actual earnings, the estimated earnings, the percentage surprise, as well as the number of analysts tracking the company.
See the On the Internet column in this issue on pages 10 and 11 for more on Web sites that report earnings releases and analyst estimates.
I would like to start my own Shadow Stock portfolio. When are updates made to the portfolio on the Web site?
—C.C. via Web Inquiry
CI Editor’s Response: The Shadow Stock portfolio review schedule attempts to coincide with the quarterly earnings release schedule of most publicly traded firms, which have quarters ending in December, March, June, and September. This is because the purchase rules require positive earnings for the latest fiscal quarter and trailing 12 months.
Updates to the Shadow Stock portfolio appear in the January, April, July, and October issues of the AAII Journal and are posted to the AAII Shadow Stock Portfolio area of our Web site at the beginning of the issue month. To receive alerts when the Shadow Stock portfolio is updated on-line, you can subscribe to the AAII Model Portfolios RSS feed at www.aaii.com/rss.