TIP OF THE WEEK – How to see 10 years of financial info in just two clicks

How to see 10 years of financial info in just two clicks

Jason Brizic

Apr. 15, 2011

Serious investors want to quickly absorb a company’s earning power and balance sheet strength over a long period of time to make better investment decisions.  A long period of time usually contains a Federal Reserve induced boom and bust.  Investors want to know how a potential stock purchase performed during the boom and bust times so they can estimate the potential risk/reward ratio.  We have experienced a boom (2003-2007) and a bust (2008-2009) in the past 10 years.

Big Promise – If you only look at the past year or three of financials, then you might be ignoring some valuable investment information.  You want to be able to quickly see how a company’s average earning power, book value per share, and other key ratios have changed over time to see how the company performed in good times and bad.

Specific claims – Morningstar.com has a 10 years of summary financials available for free on its “Key Ratios” tab.  You can get to it in two clicks.  Type your stock ticker in the Quote box at the top of the homepage and then click on “Key Ratios”.  This is very helpful during the stock screening process.  I use three rows of numbers from this view when I first examine a company: Revenue, Net Income, and Book Value per Share.

Follow with the proof – Here is the “Key Ratios” view of the 6% high dividend stock First Energy (FE) that I’m examining.

http://financials.morningstar.com/ratios/r.html?t=FE&region=USA&culture=en-US

I immediately click on the Export action button to get the data in a spreadsheet.  I use the spreadsheet to find the average net income over the 10 year period.  First Energy averaged $913.2 million in earnings per year (2001-2010).  I take that number divided by the number of current shares (418.22 million).  That gives me average earnings per share over 10 years ($2.18).  Then I multiple the average earnings by 12 and 20 to see if the current market price is below 12x average earnings (VALUE), between 12x-20x average earnings (INVESTMENT), or above 20x average earnings (SPECULATIVE).

$2.18 x 12 = $26.16

Market price = $38.43 (possible INVESTMENT basis)

$2.18 x 20 = $43.60

I can also see that First Energy’s book value per share is $28.02.  I can also see in a glance that revenues have fluctuated between a low of $7.999 billion in 2001 and $13.627 billion in 2008).  This sets me up for the next round of detailed analysis.  I will put First Energy on my watch list at around $28 per share while I perform that analysis.

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week

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Published in: on April 15, 2011 at 1:09 pm  Leave a Comment  

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