Comments on: How to Estimate Earnings Growth with Excel http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm Stock-picking is an art. I have sympathy for all who attempt it. Sat, 04 Feb 2012 09:22:49 +0000 hourly 1 http://wordpress.org/?v=3.3 By: sandy http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2979 sandy Mon, 26 Dec 2011 06:53:30 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2979 I am confused since the intercept and slope remain the same for all future periods then by just changing the year we the results will be very close to each other. I am very new to this! i did it for a company i am analysing and this is what i got EPS growth rate from 2005 to 2018. how can you explain such big differences in the growth rate for the period we have data for but then EPS changes at almost constant rate thereafter. Thanks for your help :) 13.79 36.36 -3.33 -21.84 10.29 10.40 3.04 2.95 2.86 2.78 2.71 2.64 2.57 I am confused since the intercept and slope remain the same for all future periods then by just changing the year we the results will be very close to each other. I am very new to this! i did it for a company i am analysing and this is what i got EPS growth rate from 2005 to 2018. how can you explain such big differences in the growth rate for the period we have data for but then EPS changes at almost constant rate thereafter. Thanks for your help :)

13.79
36.36
-3.33
-21.84
10.29
10.40
3.04
2.95
2.86
2.78
2.71
2.64
2.57

]]> By: Lumilog http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2582 Lumilog Sun, 26 Dec 2010 19:25:59 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2582 Thanks for the comment Ian. I'm not overly familiar with logistic regression, but isn't its answer usually just a Yes or No? Or maybe just the probability of something happening or not (you were thinking probability of missing what the street is expecting?). It's certainly an interesting idea - maybe one to be solved more by multifactor models tuned over historical data in Matlab rather than using Excel's linear regression. By the way, if you're into predicting election results, Oscar winners, etc., you should check out the <a href="http://en.wikipedia.org/wiki/Prediction_market" target = "_blank" rel="nofollow">prediction markets</a> at <a href="http://www.intrade.com" target="_blank" rel="nofollow">Intrade</a>. Fascinating stuff... - Lumi Thanks for the comment Ian. I’m not overly familiar with logistic regression, but isn’t its answer usually just a Yes or No? Or maybe just the probability of something happening or not (you were thinking probability of missing what the street is expecting?). It’s certainly an interesting idea – maybe one to be solved more by multifactor models tuned over historical data in Matlab rather than using Excel’s linear regression. By the way, if you’re into predicting election results, Oscar winners, etc., you should check out the prediction markets at Intrade. Fascinating stuff…

- Lumi

]]> By: Ian http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2569 Ian Sat, 04 Dec 2010 00:00:13 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2569 Hello, Lumi, Very nice job. I am also like you, turn form engineering area to finance area, or you can say it is still engineering, which is financial engineering. This artical is about estimate EPS, so I want to ask how can we use logistic regression method to estimate the EPS? I present this method is because it was used very well by someone to predict political election and even Oscar and world cup winner. I appreaciate a lot. Hello, Lumi,
Very nice job. I am also like you, turn form engineering area to finance area, or you can say it is still engineering, which is financial engineering.

This artical is about estimate EPS, so I want to ask how can we use logistic regression method to estimate the EPS? I present this method is because it was used very well by someone to predict political election and even Oscar and world cup winner.

I appreaciate a lot.

]]> By: Lumilog http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2465 Lumilog Wed, 14 Jul 2010 14:35:10 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2465 Shimi - for example, for cell C5 the value should be: =log(B5) You'll run into problems if the value in the B column is negative, in which case you have to add an offset (and later remove it) to be able to do log( ). Hope this helps! Shimi – for example, for cell C5 the value should be:

=log(B5)

You’ll run into problems if the value in the B column is negative, in which case you have to add an offset (and later remove it) to be able to do log( ).

Hope this helps!

]]> By: shimi http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2462 shimi Fri, 09 Jul 2010 16:01:05 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2462 hello lumi, i'm using your data in my spreadsheet onething that is not working for me is the log(EPS) column c in your screen shot here what's the formula for that column please let me know. many thanks! hello lumi,

i’m using your data in my spreadsheet onething that is not working for me is the log(EPS) column c in your screen shot here what’s the formula for that column please let me know. many thanks!

]]> By: Lumilog http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2461 Lumilog Tue, 06 Jul 2010 18:21:07 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2461 shimi - i think i can help, tell me which lines aren't working out for you. mohana - MSN Money has the data at least for EPS. It can be a little hard to find through all the menus, but here's a link to 10-year EPS for Exxon: http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=xom&lstStatement=10YearSummary&stmtView=Ann if you do a little searching you might find the same for dividend payout ratio on their site. shimi – i think i can help, tell me which lines aren’t working out for you.

mohana – MSN Money has the data at least for EPS. It can be a little hard to find through all the menus, but here’s a link to 10-year EPS for Exxon:
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=xom&lstStatement=10YearSummary&stmtView=Ann

if you do a little searching you might find the same for dividend payout ratio on their site.

]]> By: Mohana Ganesh http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2460 Mohana Ganesh Tue, 06 Jul 2010 05:28:43 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2460 I am from Mumbai, India. Where can one get past 10 years EPS and historical dividend payout ratio. Thank you I am from Mumbai, India. Where can one get past 10 years EPS and historical dividend payout ratio.

Thank you

]]> By: shimi http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2458 shimi Sun, 04 Jul 2010 09:24:55 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2458 hello lumi, i think i'm a bit late comer on this great article but i found this very informative. however, i just don't get to work to get some values on my spreadsheet with that of the values posted here like the log :( can you help me with this? thanks in advance! hello lumi,

i think i’m a bit late comer on this great article but i found this very informative. however, i just don’t get to work to get some values on my spreadsheet with that of the values posted here like the log :( can you help me with this? thanks in advance!

]]> By: Lumilog http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2389 Lumilog Tue, 19 Jan 2010 22:51:45 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2389 Thanks for writing Warren. Hyperinflation gives an interesting twist and I'm only familiar with how to handle it in financial statements at a high level. Of course a major problem with recent statements is that assets may be carried at historical values, and if you translate them into dollars at the current rate they look like they're worth far less than they really are. To bring balance sheets up to date you have to go through the pain of multiplying items that are carried at historical cost (usually non-monetary) by the change in price index since their time of purchase. From a pure forecasting EPS point of view, my best guess would be that if you had the historical inflation data, you could subtract it out from EPS growth in order to get the real growth. Then you'd need to add back in your best guess for inflation for the next year or two in order to forecast future EPS. Have you tried something like this? Best, Lumi Thanks for writing Warren.

Hyperinflation gives an interesting twist and I’m only familiar with how to handle it in financial statements at a high level. Of course a major problem with recent statements is that assets may be carried at historical values, and if you translate them into dollars at the current rate they look like they’re worth far less than they really are. To bring balance sheets up to date you have to go through the pain of multiplying items that are carried at historical cost (usually non-monetary) by the change in price index since their time of purchase.

From a pure forecasting EPS point of view, my best guess would be that if you had the historical inflation data, you could subtract it out from EPS growth in order to get the real growth. Then you’d need to add back in your best guess for inflation for the next year or two in order to forecast future EPS. Have you tried something like this?

Best,
Lumi

]]> By: Warren http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm/comment-page-1#comment-2388 Warren Fri, 15 Jan 2010 14:42:09 +0000 http://luminouslogic.com/how-to-estimate-earnings-growth-with-excel.htm#comment-2388 Your forecasting methods are useful and straight forward, thanx for that. What forecast methods can you use when you are in a Zimbabwean environment where financial results were reported in the local currency under hyperinflationary conditions. In essence, financials had no relevence. The country has dollarised , and firms have only produced their half years' in US dollar.What are the ideal forecasting methods in such a scenario? Your forecasting methods are useful and straight forward, thanx for that. What forecast methods can you use when you are in a Zimbabwean environment where financial results were reported in the local currency under hyperinflationary conditions. In essence, financials had no relevence. The country has dollarised , and firms have only produced their half years’ in US dollar.What are the ideal forecasting methods in such a scenario?

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