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Growth
Analysis Scorecard |
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Company____________________ |
Date__________________ |
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Step 1) Analysts’ Ratings & Forecasts Sentiment Index _____ Add one point if the Sentiment Index score is within the range of minus two to plus two. Subtract one point if the SI score is less than minus 2 or greater than 8. Earnings Growth _____ Subtract one point if the forecast year-over-year earnings growth is less than 15%. Earnings Forecast Trend Disqualify candidate if the current or next fiscal year EPS forecast decreased three cents or more during the last 90 days. Earnings Surprise History Disqualify candidate if two of the last four earnings surprises were negative. Step 2) Valuation Implied Growth _____ Add one point if the implied growth is less than next fiscal year’s forecast year-over-year percentage earnings growth. Subtract one point if the implied growth exceeds 40%. Step 3) Target Price Current price vs. target buy price _____ Add one point if the current price is below the high target buy price. Subtract one point if the current price exceeds the low target sell price. Step 4) Industry Analysis Industry Growth _____ Add one point if the industry sales growth rate exceeds 20%. Subtract one point if the industry growth rate is less than 15%. Industry Concentration _____ Add one point if the industry has less than four major competitors. Step 5) Business Plan Business Plan Score _____ Record business plan score. Step 6) Management Quality Key Executive & Board Quality _____ Add one point if you rated the key exec & board quality very good or excellent. Clean Accounting/EPS Growth Stability _____ Subtract one point if the non-recurring charges percentage of sales averaged 3% or more over the past five years, or if you judged the earnings growth stability as poor. Stock Ownership (not included in score) |
Step 7) Financial Health Financial health is a pass or fail test. Disqualify candidates that fail the appropriate test. Step 8) Profitability Sales Growth _____ Add one point if recent historical year-over-year sales growth exceeds 25%. Subtract one point if recent historical year-over-year sales growth is less than 15%. Operating Margins Disqualify candidate if operating margins are deteriorating. Return on Assets _____ Add one point if the recent annual ROA averaged higher than 14%. Subtract one point if the recent annual ROA averaged less than 6% Operating Cash Flow Disqualify candidate if its operating cash flow was negative in two of its last three fiscal years. Step 9) Red Flags Red Flags Disqualify candidate if any red flags are detected. Yellow Flags _____ Subtract one point for each yellow flag detected. Step 10) Ownership Institutional Ownership Disqualify candidate if less than 30% institutional ownership. Total Insider Ownership _____ Subtract one point if insider ownership exceeds 55% of shares outstanding Step 11) Price Chart Share Price vs. Moving Average _____ Subtract one point if the share price is more than 50% above its 200-day MA
Total Score _____
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