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I seek to liberate investors from the chains of borrowed opinions by teaching metric awareness that leads to the formation of your own opinions. I am a retail investor that gathers, processes and analyzes significantly more data than average. I share that data in my articles. I let the data do... More
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  • EPS Projection Accuracy - Region Banks Of The North And East 0 comments
    Mar 22, 2014 2:07 PM

    I do my coding, my data, and my output in javascript. I do not use a database program. I believe I have more control of the appearance of the output by doing in this way. I occasionally do weird stuff - thus I want that extra freedom. But there are limits to my coding abilities - and limits to the extra effort I am willing to produce. Sometimes I live with some errors. And the upcoming data contains one of those errors.
    For most sectors, I change the negative earning projections to a token positive amount. P/E ratios based on negative earnings is garbage output. Regional banks of the North and East is the one sector where I experimented with inputting negative earning numbers. When it comes to changes in negative earning projections, the data will be in error. I want my algorithms to be easy to read - easy to change - and easy to update. Clouding the code with "if statements" to correct the output would sub-optimize my efforts - so I do not do it. Be aware that when a negative projection changes to a positive projection, the math still produces a negative change in this output.
    Even with those faults, I believe that awareness of this data is important. For example, if one were choosing between two banks with near equal yields and dividend projection CAGRs - Bank A and Bank B - for an upcoming purchase. It is logical to compare their P/E ratios and dividend to EPS ratios. That kind of comparison is elementary. But what if one of the banks had greater EPS projection accuracy? That would be a big factor in my decision. And that is a reason why I believe there should logically be significant differences in the required rate of returns in this sector.

    Changes in intra-year EPS projection estimates by Year
    This test highlighted significant differences in EPS accuracy - Banks EPS accuracy is lacking, even when grading with a liberal curve


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