Educational Programming Video
The Value Line Investment Survey
Program 13: The Statistical Array - Part 1
In this session we will begin discussing the part of a company page that we at Value Line call the Statistical Array. This is the section of the report that contains all the statistics.
There is a tremendous amount of data included in this section, and we will take more than a few sessions discussing it.
To start, we will give you an overview. On most reports there are 16 years of historical financial data. The exact number will depend on the number of years of data available if a company has been in existence less than 16 years, we obviously will not have information for the early years. It will also depend on the timing of a company's fiscal year end. One important thing to know is that the historical data, which is in the left side of the array, is always printed in regular typeface. There are also normally three columns of forecasted data, usually for the current year, the next year, and for the period 3 to 5 years out in the future. These items are on the right side of the array, and you can identify the forecasts because they are in bold italic typeface.
There is one other significant differentiation of data. The numbers in the upper portion of the array are per-share data (sales, cash flow, earnings, dividends, capital spending, and book value) or items relating to common stock (shares outstanding, average annual P/E ratio, relative annual P/E ratio, and annual dividend yield.) The items in the lower portion are total (or gross) ones and are either taken directly from or are calculated from items in a company's income statement or balance sheet.
Before we begin, we want to point out that, Value Line's long-standing practice is to use originally reported data. By that, we mean that we don't go back and restate data for things like mergers or divestitures that take place after a company has reported annual results. When you look at a 10-year financial table in a company's annual report, you may find that the data for the early years has been restated to reflect mergers or other actions that took place many years later. We do not make the same restatement. We think investors should be able to compare the historical price of a stock in any year with the results that were actually reported in the same year, since those results are the ones that determined the price of the stock at the time.
Now we will look at one of the items in a typical Statistical Array. The numbers we will discuss are from a "standard" industrial company. There are actually a number of different statistical formats in the pages of The Value Line Investment Survey. The majority of companies are ones we classify as industrial. But there are also many other companies, such as banks, insurance companies, REITs, and retail stores that have their own formats.
Sales (or Revenue) per share are in the top line. This number is a very important one since the level of sales is an important determinant of earnings. The trend of sales over time is also very important, particularly to investors interested in growth, since it is very difficult for earnings to increase over time if sales do not also increase.
We should also briefly discuss the difference between the terms "sales" and "revenues," which is sometimes confusing. Traditionally, when a company sold a physical good, it referred to the transaction as a sale. When a consumer purchases a suit, a car, or a house, for example, the transaction is clearly a sale. However, to confuse things, the company selling you the suit, the car, or the house may have a subsidiary that loans you the money to buy it. If that is the case, the company receives interest from you, and interest is normally considered revenue, not sales. That's one of the reasons that some of the large auto companies report revenues, and not sales. Over time, services have become more important in our economy, and when a consumer or business buys a service, such as healthcare, a telephone line, or an Internet connection, the resulting income is usually referred to as "revenue." In many cases there is not a major difference between sales and revenues. To be consistent, however, Value Line follows the practice of using whatever term a company uses in its own financial reports. If a company uses the term sales, we use sales, if it uses revenues, we use revenues.
There is a lot more financial data to talk about. We will continue the discussion in the next session.
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