It’s Earnings That Count: Can you identify the next Satyam?

Published: April 14, 2017 at 9:46 am

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In this guest post, R. Srivatsan explains how to differentiate a good business from a bad one, using a stock valuation technique known as Earnings Power Box, introduced by Hewitt Heiserman, Jr, in his book,  “It’s Earnings That Count: Finding Stocks with Earnings Power for Long-Term Profits”.  Following his suggestion, I have added this feature in the freefincal automated stock analyzer.

His post is in the form a presentation and I have converted each slide into an image. It is easy to read and understand. By the way, Last few tickets are also available for the 3rd New Delhi event to be held on April 23rd, 2017 (link below). 

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Srivatsan acknowledges his friend Mr. Punith Sacherla for his business insights, catchy title and suggestions on the draft presentation.

Details of the calculation can be found here. here.

Download the Automated Stock Analysis with the Earnings Power Box

Srivatsan has agreed to write another post with more example. Please join me in thanking him for a fine presentation. Do let me know what you think.

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Kolkata DIY Investor Workshop May 28th 2017

Register for the Kolkata DIY Investor Workshop May 28th 2017

Last Few Tickets: New Delhi DIY Investor Workshop April 23rd, 2017

Register for the New Delhi DIY Investor Workshop April 23rd, 2017

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Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
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7 Comments

  1. This article is great. If we strictly follow this, most of the so called blue chip Infra/Capital goods/Engg/Commodity stocks will fail miserably. I await the stock analyser for this concept which he has proposed to put it up tomorrow.

  2. Dear Professor/Guru,
    Thanks to you and special thanks to Mr.R.Srivatsan and Mr. Punith Sacherla for providing one more direction to analyse the buisness.

    Thanks for valuable time spent.

    Regards
    Jig

  3. Hello Sir, Great article and very easy to understand. I have one query, cant we use Cash Flow From Operation instead of Net profit as net profit is accounting number while real cash is in cash flow from operation. Please help me with the doubt.

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