Jim Collins’ Post

Another great post and infographic by Dave Ahern.  Some people might think that Earnings Yield and the Price to Earnings Ratio are interchangeable, since the Price to Earnings is just the inverse of the Earnings Yield. But here is why I feel that Earning Yield is better. Let's say you are comparing a group of stocks. Typically, lower Price to Earnings ratios are preferred since these are value stocks. However, if some of the stocks have negative earnings, those stocks will sort to the top of the list because they have a low Price to Earnings Ratio. However, Earnings Yield will sort them the proper way, since we typically want to avoid companies with negative earnings.

𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗬𝗶𝗲𝗹𝗱: 𝗪𝗵𝗮𝘁 𝗜𝘁 𝗜𝘀 𝗮𝗻𝗱 𝗪𝗵𝘆 𝗜𝘁 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 Earnings yield is a simple financial metric that helps investors understand how much a company earns compared to its stock price. It is expressed as a percentage and inverse of the Price-to-Earnings (P/E) ratio. The formula to calculate earnings yield is: 𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗬𝗶𝗲𝗹𝗱 = (𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗣𝗲𝗿 𝗦𝗵𝗮𝗿𝗲 ÷ 𝗦𝘁𝗼𝗰𝗸 𝗣𝗿𝗶𝗰𝗲) × 𝟭𝟬𝟬 For example, if American Express has earnings per share (EPS) of $13.6 and its stock price is $303, the earnings yield would be:   ($𝟭𝟯.𝟲 ÷ $𝟯𝟬𝟯) × 𝟭𝟬𝟬 = 𝟰.𝟰𝟴% This means the company earns 4.48 cents for every dollar invested in its stock. Earnings yield is important because it helps investors evaluate whether a stock is a good investment. A higher earnings yield suggests that a stock may be undervalued, meaning it could provide better returns than its price. On the other hand, a low earnings yield might indicate that a stock is overvalued or that investors expect strong future growth. Investors often use earnings yield to compare stocks to other investment options, like bonds. For example, if a stock has an earnings yield of 8% and a government bond offers a yield of 4%, the stock might be a better choice, assuming the risk is acceptable. Earnings yield is especially useful in identifying value stocks—companies trading at a lower price than their earnings. However, it is important to use this metric alongside others, like dividend yield or debt levels, to get a full picture of a company’s financial health. In summary, earnings yield is a valuable tool for investors to assess stock value, compare investments, and decide where to put their money. *** P.S. Want to grow as an investor? Learn how to start analyzing companies based on their fundamentals. Unravel the mystery of Nvidia, Meta, and Google. Get my FREE Fundamental Analysis Visualized ebook here: https://lnkd.in/e4yRTZnn

These are the stocks on my watchlist (10/29) DJT- Another massive upmove in the past month, going to be handsoff in this stock unless we go parabolic (make a HUGE move like 55 -> 100 in a single day). Not interested in playing the long, and multi-day short is extremely dangerous. TSLA- We finally saw the stock pull back a little from a close to 30% upmove, watching $275 level at new highs. Currently short but will likely cover today.    PYPL- Reported better than expected third-quarter earnings but missed on revenue. EPS of $1.2 vs $1.07 expected. Revenue of $7.85B vs $7.89B expected. Deteriorating margin, missed revenue, and guidance all underwhelm. SOFI- Revenue of $697M vs $623M, EPS of $0.05 vs $0.04. Raised guidance and cited members growth. Overall seems like good news, but not sure why stock is selling off. Watching at open. MCD- Reported quarterly earnings/revenue beat, but cited fears to ecoli outbreak affecting sales. Said that there might be an effect to Q4 members. Beyond that, nothing too interesting in the earnings. Earnings: GOOG, V, AMD, PFE, SNAP, CMG, FSLR, RDDT, QRVO

The Mag 7 have a storied history of stock buybacks. Buybacks enhance earnings per share...corporate earnings could remain flat or grow but shares are reduced thereby painting a rosier EPS picture. Here is an interesting overview of the Mag 7 buybacks over the last year. #stockbuybacks #mag7 visit us at www.CSAMG.com for additional insights.

1 in 3 Investors Makes This Mistake During Stock Split Are You One? When companies announce a stock split, most investors get excited. But here’s what usually happens: → The stock price surges as people rush in, expecting a post-split rally. → Then comes the letdown — prices drop or stay flat as the initial hype fades.  → Many end up holding shares at a higher valuation despite the lower price. It’s a classic example of market psychology. Investors see a cheaper price and think they’re getting a great deal…but the valuation hasn’t changed. So, what should you do? Take a step back, and look at the big picture: → Does the stock have strong fundamentals? → Is it worth buying and holding even if the price drops? → Or is this just a short-term momentum play? Buying before a split can seem like a smart move…But without considering these factors, you might end up in a losing trade. Would you buy before a stock split? Or wait and watch? #investing #stockmarket

Beating expectations, buying back stock, dividend announcements, and stock splits. Until all this finally turns and heads in the opposite direction, for several quarters running (because this market will enjoy a series of interest rate cuts, all of which will take the market higher), the momentum the market has had since the GFC will simply continue. Likely this entire year will be one of the biggest and best for the stock market. https://lnkd.in/ge7DtrWH

Stock splits can get investors excited. Here's a short and simple article that explains what is good (or not) about a split.

I had a chat with a friend recently. He was hyped about a stock, claims it's "undervalued." I'm all for scoring deals, so I dive in, do my homework. Spoiler alert: didn't see any margin of safety (MOS) on that stock. But, hey, I'm not one to jump to conclusions without digging deeper. "Why's it undervalued?" His response: "Their profit history's solid, beating market estimates left and right." Good point, but stocks aren't priced on past glory. They're bets on the future cash flows. A company on a rocket ship of growth? You bet it's gonna have a sky-high P/E ratio. 🚀 P/E Ratio Demystified: It's simple. Stock price divided by earnings per share. But the magic? It's all in predicting future performance. It's about the risk vs. reward. Let's say a stock needs to offer a 15% return (K) to woo investors, expects a 5% growth (G), and plans to dish out a $4 dividend next year. Using the Gordon Growth Model [Dividend /(K-G)], we're looking at a $40 stock. But twist the growth to 10%, and suddenly, the price doubles to $80. See? It's not about today's numbers. It's about tomorrow's promise. And here's the real deal: The market's smart. Stock prices have all the known info baked right in. Thinking you've got an edge? Odds are slim. So, next time someone whispers "undervalued" in your ear, remember, it's not about the past; it's about the future. And in this game, it's the forward-looking, informed bets that win. #InvestmentStrategy #RiskManagement #FinancialInsights #RiskReward

What stock splits tell you about a company’s outlook