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Chuck Carnevale
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Charles (Chuck) C. Carnevale is the creator of F.A.S.T. Graphs™. Chuck is also co-founder of an investment management firm. He has been working in the securities industry since 1970: he has been a partner with a private NYSE member firm, the President of a NASD firm, Vice President and Regional... More
My company:
F.A.S.T. Graphs™
My blog:
F.A.S.T. Graphs Research
  • How To Interpret FAST Graphs™ 15 comments
    Jan 10, 2013 2:40 PM

    FAST Graphs™ are a "tool to think with" and as such, have no agenda of their own. Instead, they are designed to provide "essential fundamentals at a glance" and allow the user to interpret the data according to their own philosophies, strategies and beliefs. In this context, FAST Graphs™ are the deliverer or reporter of important information.

    Essentially, the FAST Graphs™ stock research tool provides investors many benefits, but there are four things they do very well.

    1. They provide a historical review and instantaneous perspective of how well the business behind the stock has historically performed (the orange earnings justified valuation line).

    2. They provide an instantaneous perspective of how the market has historically capitalized or priced the company's operating results or business performance (the blue normal PE ratio line).

    3. They provide a precise consensus estimate of leading analysts' near term earnings expectations for a company's current fiscal year and next fiscal year followed by a five year earnings growth consensus estimate (estimated earnings and return calculator graph).

    4. They provide the opportunity to override and therefore input the user's own estimates or expectations of the company's future prospects (override function is located on navigation bar).

    Tool To Think With

    FAST Graphs™ are a dynamic tool that calculates the company's changing growth rates each time a different time period is selected. Therefore, the user can determine such things as whether the company's earnings growth rates are accelerating, decelerating or staying the same, and see major inflection points, if any, with a company's business vividly revealed. This is a major component of the "tools to think with" aspect of this fundamental research tool.

    Earnings & Price Correlation

    FAST Graphs™ reveal the undeniable correlation and relationship between earnings and stock price on any publicly traded company. This "tool to think with" helps the user determine fair valuation; past, present and future, on any company being examined. Therefore, the user is empowered with the proper perspectives towards making sound buy, sell or hold investing decisions.

    The Key

    The key to running the FAST Graphs™ tool is the proper utilization of the light brown or tan vertical navigation bar to the left. This navigation bar is what drives the FAST Graphs™. We suggest clicking the drop-down menu box titled "Select Yrs" and running multiple graphs starting with a 15-year default graph and then shortening the graphs to, for example, a 10-year graph, followed by a 5-year graph, followed by a 2-year graph, etc. Any combinations of years, from as short as the last 2 years all the way out to the last 20 years, can be run.

    A Dynamic Tool

    When running multiple graphs you will notice that FAST Graphs™ is a dynamic tool that automatically calculates and recalculates growth rates and valuations. The most obvious advantage to running dynamic graphs over multiple time periods is to determine whether or not growth rates are accelerating, decelerating or staying the same. Consequently, it might also make sense to focus more on the most recent time frames such as the last five years, two years, etc.

    Comprehensive Research More Efficiently

    The FAST Graphs™ research tool is designed to help the user more efficiently conduct a comprehensive research effort. Just above the historical graph is a link to the company's website. This enables the researcher to access the company's financials, review any presentations they have provided, read news releases, etc.

    Link to Company's Website/Google Finance/MSN Money

    In addition to the link to the company's website on the top of the historical chart, there are three additional links in the tan navigation bar to the left of the graphs. Two of the links, "Summary" and "Quote" will take the user to Google Finance and MSN Money respectively. These links provide additional research that the user can quickly and easily examine.

    Link to Zacks' Estimates

    The final link at the bottom of the navigation bar "To Find Other Estimates or Symbols" takes the user to the MSN Money page where Zacks' earnings estimates can be reviewed. This provides the user a cross-check of the earnings estimates that can be compared to the Standard & Poor's Corp. Capital IQ that FAST Graphs™ defaults to.

    The following screenshots depict all of the historical and forecasting graphics available with FAST Graphs™. Remember, the live fully functioning FAST Graphs™ are dynamic tools that can be utilized instantly and easily provide a comprehensive perspective of a stock, how its business has performed and how the market has value that performance over time.

    Historical FAST Graphs™

    The historical charts provide you historical information. This includes historical growth rates, normal P/E ratios, earnings per share, dividends, etc. In other words, they tell you what has happened and how the stock price has reacted to what has happened. Running multiple graphs allows you to determine whether earnings growth has accelerated, decelerated or stayed the same.

    (click to enlarge)

    PE & Interest Rates and Sales & Price/Sales

    Regarding the red graphs with the blue lines, the first one simply graphs interest rates for whatever time frame you are drawing, and either the year-end PE or year-end P/FFO, whichever is appropriate. If you point your curser at the top of the red area a pop-up will appear showing you what the interest rate on a 10-year treasury was on that date. If you put your mouse pointer on the dark blue squares on the dark blue line, the year-end PE or P/FFO will pop up.

    In theory, there should be an inverse relationship between the blue line and the red shaded area. In other words, during normal times, as interest rates would rise, PE ratios would fall, and vice-versa. However, since the irrational exuberant period (1999-2001), there has been a direct relationship. As interest rates have fallen so have PEs. Nevertheless, the point of those graphs are to allow you to see what normal PE ratios (P/FFO) for the company have been, and whether or not interest rates had any effect.

    The second graph is simply sales (the red shaded area) and price (the blue line) overlaid in order to determine the current and historical price to sales. This is an important valuation measurement that this graph reveals. When you point to the red shaded are, sales in millions and date will pop up. When you point to the blue line, the price to sales ratio will pop up. This graph helps you determine whether the company's current price to sale ratio is high, low or normal.

    (click to enlarge)

    Performance Graph

    The Performance graph calculates the performance of the stock over whatever time frame has been graphed. The dates that the performance is measured against are listed at the top of the graph. If the company pays dividends, a dividend cash flow table will be included. The performance is calculated as if the dividends were paid out and not reinvested. Therefore, you can see the entire performance that came from dividends, the entire performance that came from capital appreciation, and the total return combination of both.

    (click to enlarge)

    Forecasting Graph

    The Earnings and Price Return Calculator (forecasting charts) plot weekly closing prices, and the last plot is the previous day's close. The dark orange line is calculated using one of three formulas. Follow this link here to the definitions. However, once the PE valuation is calculated, the lighter orange lines above and below are drawn at the same slope, however, they are 10% increments above and below the dark orange line. Notice they are parallel. The scale to the right tells you what PE ratio each of the orange and blue lines on this graph represent. To be clear, if the price is touching one of those lines, then it is trading at the PE ratio that can be determined by the scale to the right. Again, assuming this stock is precisely touching one of those lines. If not, then you simply eyeball extrapolate between the two.

    (click to enlarge)

    10-Year Earnings Yield Estimate (EYE Chart)

    The EYE ratio chart and table, which stands for Earnings Yield Estimator, generates the table that translates the Estimated Earnings and Return Calculator graph into numbers. The table is based on whatever earnings estimate is found on the Estimated Earnings and Return Calculator. However, you do have the option of over-riding the earnings estimate to a higher or lower number according to your belief, and a new EYE table will be generated based on your over-ride. The basic idea is to mathematically determine whether or not an investment in a prospective company justifies you for the risk you are assuming based on the earnings yield.

    The columns are color-coded in order to provide a quick perspective of certain relationships. When the column turns blue, this indicates that the cumulative dividend yield would now surpass the cumulative interest payments from the 10-year Treasury bond it is compared to in yellow.

    Importantly, focus on the columns at the top of the table which tell you what you are looking at in each column. The brown cell in the Target Prc Est Tot Ret Column indicates the last price for the fiscal year and the rate of return it represents.

    To summarize, the EYE ratio estimator simply puts the estimated earnings and return calculator picture into numbers and compares it to an equal investment in a 10-year Treasury bond.

    (click to enlarge)

    (End of Article)

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Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (15)
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  • Chuck, are there any plans to expand your graphs site to broadly cover international stocks? The site and the graphs look great, but as a non-US investor, I am not going to join the service if it only covers a fraction of the market.
    10 Jan 2013, 07:33 PM Reply Like
  • Author’s reply » Dan,

     

    Not eminently, but someday. For now US, Canada and ADR's.

     

    Chuck
    10 Jan 2013, 08:07 PM Reply Like
  • Are we talking all ADRs (including something like MURGY & BURBY, for example) or only officially company sponsored ones (like BP & DEG)?
    11 Jan 2013, 02:36 PM Reply Like
  • Author’s reply » yv204,

     

    Select ADR's. However, FASTGraphs currently offers over 11,000 symbols.

     

    Regards,

     

    Chuck
    11 Jan 2013, 02:41 PM Reply Like
  • Thank you.
    14 Jan 2013, 03:08 PM Reply Like
  • ====>Chuck, are there any plans to expand your graphs site to broadly cover international stocks....<==========

     

    Not so F.A.S.T.! Sorry Dan and Chuck....I couldn't pass it up!
    11 Jan 2013, 09:57 AM Reply Like
  • Author’s reply » Gary,

     

    Gary...;)

     

    Chuck
    11 Jan 2013, 02:42 PM Reply Like
  • I have been a subscriber to FAST graphs for a few weeks now and I must say that all investors should have it as part of their tool box for investing. What a great resource!
    11 Jan 2013, 01:06 PM Reply Like
  • Author’s reply » jaych79,

     

    What a great compliment,thanks.

     

    Best,

     

    Chuck
    11 Jan 2013, 02:43 PM Reply Like
  • Chuck, I am glad that you included the graph for one of my favorite stocks: CHD.
    11 Jan 2013, 01:48 PM Reply Like
  • Author’s reply » J.A.,

     

    You are welcome.

     

    Chuck
    11 Jan 2013, 02:44 PM Reply Like
  • I just started a subscription in Jan this year as a present to myself. After a year's worth of looking at the charts in your articles, I found them to be a good, quick, top-level overviews of a company and they quickly became my go-to source of information when beginning to investigate for a stock purchase. Thanks for the good work!
    11 Jan 2013, 05:58 PM Reply Like
  • Author’s reply » jgbrowning,

     

    I appreciate that, welcome to the FASTGraphs family.

     

    Chuck
    11 Jan 2013, 06:36 PM Reply Like
  • Let me start off by saying I am a new user and congratulate you on a "fantastic" tool. I have a question on the PE & Interest Rates and Sales & Price/Sales graphs you show in the Instablog. Are they part of the premium offering or do I just not know how to activate them. I did see them show up one weekend but I have never been able to display them again.

     

    Thanks in advance for your response and for your great articles!

     

    Dave S
    20 Nov 2013, 02:46 PM Reply Like
  • Author’s reply » Dave,

     

    Thanks. Yes those are part of the Premium subscription.

     

    Thanks again,

     

    Chuck
    20 Nov 2013, 03:09 PM Reply Like
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