Educational Programming Video
The Value Line Investment Survey
Program 3: Ratings & Reports
In this session we will provide an overview of the information contained in the Ratings & Reports section (also referred to as Part 3) of The Value Line Investment Survey. Ratings & Reports is where you will find one-page reports on individual stocks, and it is the place that most investors spend most of their time.
To start, the front cover of Ratings & Reports contains a list of all the industries and companies included in that week's Edition. You will note that the companies are grouped by industry and that there is an industry page at the beginning of each group. Some of the companies listed on the cover may have one or two asterisks next to their name. One asterisk means that the stock is ranked 2 (Above Average) for Timeliness. Two asterisks mean that the stock is ranked 1 (Highest) for Timeliness.
The right hand column usually contains a list of companies in the issue that the editors and analysts consider Especially Noteworthy. Such companies are often involved in special developments, such as mergers or acquisitions, or have sales or earnings that are considerably better or worse than previously expected. On the inside front cover, you will find a list of the members of our editorial and statistical staffs. But, more importantly, you will also find our economic forecasts for the current year, the next year, and the years out 3 to 5 years. There is also some editorial commentary.
This economic forecast is at the heart of all of Value Line's forecasts, and this is the one that each of our analysts uses as the starting point when they make financial forecasts for individual companies. Unless we all use the same basic economic outlook, our forecasts for individual companies could be very different. You can imagine the strange results if one analyst were forecasting economic growth of 2% and another 5%, or one expecting interest rates of 4% and another 7%. There would, obviously, be no comparability. By using the same economic forecast, we can ensure that our forecasts for individual companies are as comparable as we can make them.
At the beginning of each industry group is a one- or two-page discussion of the industry. The formats occasionally vary, but there are normally some composite industry statistics, a chart of the relative strength of the stocks in the industry, and commentary on current developments and expected trends in the industry. The industry commentary is written by an analyst who covers one or more of the stocks included in the industry.
At the top of the right-hand column of the Industry page is a Rank for Industry Timeliness. That Rank, which is also included each week on the cover and in several places in the Summary & Index, shows how one industry compares with all the other industries followed in The Value Line Investment Survey.
We frequently receive questions about the calculation of the Industry Rank, and it's actually quite simple. The Industry Rank is based on the Timeliness Ranks of each stock in an industry. Each week, when we calculate the latest Timeliness Ranks for all of the stocks we cover, we also calculate the average Timeliness Rank of the stocks in every industry. Then we rank each Industry in order, from highest to lowest. If a lot of stocks in an industry have high Ranks, the Industry is likely to have a high Rank, if a lot have low ranks, the industry is likely to have a low rank.
A list of all Industries and their Timeliness Ranks can be found on page 24 of the Summary & Index.
Following the Industry page, you will find company pages. Beginning with the next session, I will begin describing the great variety of information on those pages.
However, there is one more important part of Ratings & Reports to talk about. That is the Supplementary Reports that you will find at the end of each issue. We publish a Supplementary Report any time that there is important news on a company since the last full-page company report was issued. Most reports result from earnings announcements or mergers or acquisitions. If, for example, a company reported earnings that were much better or worse than we had expected, we would probably issue a Supplementary Report. If a company announces that it is making a major acquisition or if a company is itself being acquired, we would also issue a report. There may be many other reasons for a Supplementary Report as well. Supplementary Reports are shown in the Index. If there is a Supplementary Report on a company you are interested in, you should read it.
In our next session, we will start reviewing the items on a Value Line company page.
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