O'Reilly logo

Fire Your Stock Analyst!: Analyzing Stocks on Your Own by Harry Domash

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Step 9: Red Flags

Now it’s time to check for red flags signaling a potential earnings shortfall in the current or next quarter and for yellow flags warning of longer-term problems. At your option, you can compare net income to operating cash flow, and if your candidate passes that test, skip the accounts receivables and inventory tests.

Sales Growth

A slowdown in historical year-over-year sales growth rates is a red flag, but if it exists, you would have discovered it in Step 8. In this section, you’ll compare forecast sales growth rates to historical trends. It’s a red flag if the forecast sales growth rates are significantly below historical levels.

Table 17-17 shows the quarterly sales summary for Impath that was shown in the Step 8 (Table ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required