Reuters.com has easy to find earnings estimates
December 9th, 2011
Jason Brizic
Knowing a company's earning power should help you determine when the company's shares are relatively value priced. Companies are value priced when they are trading at less than 12 times average adjusted earnings.
I like to factor the current year's earnings into my long term average adjusted earnings. I use Morninstar.com's website to gather the earnings per share, net income, and number of shares for the past five years. That usually gets me 2006-2010. But I still need 2011. I switch the view from annual to quarterly to get Q1, Q2, and Q3 of the current year. That leaves Q4 as an unknown.
This is where Reuters.com comes in. I use Reuters.com to get an estimate for the next quarter to complete the year. Its okay if a company beats or misses this estimate because it has little effect on a five or six year average adjusted earnings calculation.
Let's do this for one of my favorite stocks, Safe Bulkers (SB). This data comes from Morningstar.com's financials tab.
(Earnings adjusted for changes in capitalization - Safe Bulkers has issued shares in the past two years)
Year EPS Net inc. Shares Adj EPS
2006 $1.78 $97 M 55 M $1.47
2007 $3.84 $209 M 55 M $3.17
2008 $2.19 $119 M 55 M $1.81
2009 $3.03 $165 M 55 M $2.50
2010 $1.73 $110 M 63 M $1.67
For some reason unknown to me Morningstar.com wouldn't show me the quarterly data for Safe Bulkers, so I used Google Finance to find the data I need for Q1-Q3 2011
Year EPS Net inc. Shares Adj EPS
2011 Q1 $0.41 $27.31 M 65.88 M $0.41
2011 Q2 $0.47 $31.13 M 65.88 M $0.47
2011 Q3 $0.33 $22.01 M 65.88 M $0.33
Click on the Analysts tab
Scroll down to Consensus Recommendations
You will see Safe Bulkers next quarter consensus estimate of $0.35 per share
Now we can complete the estimated earnings for 2011
Year EPS Net inc. Shares Adj EPS
2011 Q4 $0.35 E $23.06 M 65.88 M $0.35
Total $1.56 E $103.5 M 65.88 M $1.56 E
Compute the six year average adjusted earnings, which equals $2.03 per share @ 65.88 million shares. Safe Bulkers is trading at $6.16 as I write this, so it is only trading at 3.03 times its six year average earnings. What a value especially with the 9.79% dividend yield. However, its stock price will decline in a global recession and a China hard landing so I think you can get it even cheaper in the $3 - $4 range.
For more tips like these go to www.myhighdividendstocks.com/tip-of-the-week
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