Educational Programming Video
The Value Line Investment Survey
Program 19: Business Description and Analyst's Commentary
In this session we will continue a discussion of the information contained in a company page in The Value Line Investment Survey. Our topics are going to be the Business Description and the Analyst's Commentary, two items containing a considerable amount of text. They appear in the center and lower portion of a Value Line page.
We will begin with the BUSINESS description, which is just below the Statistical Array. The BUSINESS section contains a description of the major areas in which a company operates. It is designed to be a summary, and it typically includes: the full name of the company, its major activities and, if available, the percentage that each of those activities contributes to revenues and profits, the significance of foreign operations, important recent acquisitions or divestitures, the number of employees and stockholders, significant insider ownership of the stock, the names of the top company officers, usually the chairman and president, the place where the company is incorporated, and the company's address, telephone number, and Internet address.
Data in this section is most often updated annually, with information taken from a company's annual report, the 10K report filed with the SEC, and the proxy statement. However, if there are changes during the year, those will be included.
The next item is the Analyst's Commentary, which, in many of our readers' views (based on both subscriber correspondence and market research), contains the single most important material in a Value Line report. This is the place where the Value Line analyst can describe what is really going on at a company. Does, for example, the analyst think that recently reported earnings figures are hiding a deteriorating basic business? Does he/she think that growth is about to pick up? Does he/she think that competition is becoming an increasing threat? Does a new product look particularly attractive? Does the stock look really inviting for longer-term investors? Or should investors completely forget the stock? These are all typical of the types of questions that might be answered in a Commentary.
There is no specific formula or correct way for writing a Commentary. The content of each one will depend on the specific company being analyzed. Among the wide variety of subjects that may be included are improving operations, deteriorating operations, acquisitions, divestitures, changes in company strategies, important changes in company management, new products, aging products, and the competitive situation. Its broad purpose is to provide the reader with: an understanding of what is happening at a company; a forecast of what is likely to happen to revenues and earnings this year, next year, and the period out 3 to 5 years; and an opinion about whether or not a stock is attractive on a short-term or longer-term basis.
The important thing is that investors reading a Value Line page always read the Analyst's Commentary in conjunction with all the other data on the page, and then, and only then, make a decision about buying a stock, selling a stock, holding a stock, forgetting about a stock altogether, or maybe just waiting until sometime later to look at the stock again. There is a great deal of information in every Value Line report, and investors should take advantage of all of it.
Well, that's it for now. There are only a few more items on a Value Line page that we have not discussed, and we will tackle them in the next session.
Thanks for joining us, and be sure to watch the Value Line Web site through out the day to see our latest comments on the economy, the stock market, and specific stocks in the news.
Factual material is obtained from sources believed to be reliable, but the publisher is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. © 2014 Value Line Publishing, Inc. RIGHTS OF REPRODUCTION AND DISTRIBUTION ARE RESERVED TO THE PUBLISHER. The Publisher does not give investment advice or act as an investment adviser. Value Line, Inc., its subsidiaries, its parent corporation and its subsidiaries, and their officers, directors or employees as well as certain investment companies or investment advisory accounts for which Value Line, Inc. acts as investment advisor, may own stocks that are mentioned on this Value Line Web site.