6-10 Competition

Everyone knows that for a company to become and remain successful, it must pay attention to its competition. When analyzing a stock, investors must also do some competitive analysis. Companies do not operate in a vacuum. They are in constant competition for consumer and investment dollars. To make the best investment decisions, you need to Read More…

               

6-09 New and Improved Products?

A company with well-respected and reliable products that have been accepted by the consumer market is often a valuable investment. How many rolls of Charmin toilet paper have you purchased in your lifetime? How many tubes of Colgate toothpaste? How many boxes of Tide laundry detergent? How many gallons of BP gas have you pumped Read More…

               

6-08 Management

As a potential investor, you need to know about the quality of the management team, the continuity of the management team, and projected future stability of the management team. After all, the performance of any organization is ultimately related to the leadership and direction provided by its leaders. History is full of examples of CEOs Read More…

               

6-06 Revenue and Earnings Estimates

When you’re considering buying or selling a stock, it is just as important to look at future expectations as historical performance. We can read all of the 10-KsThe annual SEC filing by public companies that includes their audited Income Statement, Balance Sheet, Cash Flow Statement and other detailed notes about the companies financial and operating Read More…

               

OK, so we have discussed sales, operating income, EBITDA Earnings before interest, taxes, depreciation, and amortization. , and net income. Which is the best measure of a company? The answer, unfortunately, is NONE OF THE ABOVE! If Stock A and Stock B are in the exact same industry, have the exact same revenues, costs, EBITDA Read More…

               

6-04 Understanding Cash Flow Statements

Once you have understood a company’s profitability, take a look at the Statement of Cash Flows because this is the second most important element of Fundamental Analysis and it frequently needs more than a cursory examination. Many experts strongly contend that good cash flow is more important than earnings to ensure company viability for the Read More…

               

6-03 Operating Income, EBITDA and Net Income

A company’s net income is one of the most critical pieces of data you can pull out of the financial statements because it is this profit that generates cash and cash drives value. A company can produce the most innovative products, be in an industry with minimal competition, and have superior management, but the company Read More…

               

6-02 The Income Statement-An Introduction

You have to know how to read an Income Statement if you want to understand Fundamental analysis. An Income Statement follows this format: Revenue/Sales – The “top line” number on an Income Statement is usually the revenue/sales number that indicates the total sales of the company. This is the total cash register receipts of all Read More…

               

6-01 Information: 10-Ks, 10-Qs, and 8-Ks

The first place to start analyzing a company is to go straight to the source and review the financial information that the company is publishing about itself. In previous chapters we talked about IPOs and what it takes to be a public company in the U.S. To remain a public company in good standing with Read More…