Educational Programming Video
The Value Line Investment Survey - Small and Mid-Cap Edition
Program 5: The Ratings and Reports Page - Part 3
The features and information the Small and Mid-Cap Edition offers are very similar to those provided by the Value Line Investment Survey-Standard Edition, but there are some differences. As a result, we feel it important to review the specific details of what the Small and Mid-Cap Edition includes.
In this lesson, we will continue a discussion of items on an Small and Mid-Cap Edition page. We begin by picking up where we left off in our last discussion, where we discussed consensus earnings estimates and the great number of financial items contained in what we call the statistical array. Moving below the statistical array in the left-hand column is the annual rates box. The annual rates box shows the compound yearly rates of change of per-share sales, cash flow, earnings, dividends, and book value over the past five years and the most recent year. In general, investors find it best when all per share numbers grow together at a similar rate. But when earnings per share are depressed due to poor margins, a high level of growth in sales per share can provide the potential for an earnings recovery. Cash flow per share is the sum of reported earnings plus depreciation less preferred dividends. It shows a company's internal cash-generating ability. The cash can be used for future plant and equipment expenditures or to help finance external growth through acquisitions without the need to take on debt. It is therefore an important number to pay attention to. Dividends and dividend growth are often not an important consideration for most small- and mid-cap companies. However, there are some exceptions. This is a consideration when investing in banks and thrifts, utilities, and stocks in cyclical industries where dividends are a component of total return of the investment. Dividends may be growing faster in the last year, (or slower) compared with the last five years, reflecting a company's improving (or weakening) financial conditions.
Below the annual rates box are quarterly sales, earnings and dividend tables. Each includes up to five years data. As in the annual statistical array, earnings exclude nonrecurring items and are adjusted for subsequent stock splits and stock dividends. Below the quarterly information is a box showing institutional decisions for the past three quarters. The data here is designed to help subscribers determine what the level and trend is of institutional investment in a stock. In the middle of the page is a company's balance sheet information for the past two years and the latest quarter. It includes details of current and total assets, current liabilites and long-term debt, preferred stock and common stock.
To the right is a company's business description. The beginning of the description consists of a detailed summary of what the company does. The second half of the description tells of recent news that occurred over the past several months. When the Ranks are suspended; the reason for the suspension (usually a takeover offer) is stated at the beginning of the description. When the recent quarterly earnings we report exclude nonrecurring gains or losses, we usually state that at the bottom of the description with other recent news. On the bottom we also include the Chairman or President's name, company address and phone number, Internet address and the date that the report is delivered to Small and Mid-Cap Edition subscribers. On the bottom right of each page is the stock's total return. This shows the sum of the total appreciation (or depreciation) of a stock over a given period plus any cash dividends received during the same period divided by the price of the stock at the beginning of the period. Each page includes a stock's total cumulative returns for three months, six months, one, three and five years (if applicable).
This ends our series dedicated to discussing the contents of the Small and Mid-Cap Edition page. In our next broadcast we will discuss the success of the ranking system and why investors should use the product.
Again, thank you for visiting us here at www.Valueline.com. Have a prosperous day.