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It's Earnings That Count : Finding Stocks with Earnings Power for Long-term Profits
An innovative way to see through a company's published numbers to discover its true investment potential
This book gives you a blueprint for finding a great growth stock for the next decade without taking on a lot of risk in the process. Inspired by the writings of Benjamin Graham, It's Earnings That Count examines a firm’s earnings quality from the perspective of a “defensive” investor who wants to avoid committing ruinous mistakes as well as the “enterprising” investor who seeks Wall Street’s next great opportunities. Unfortunately, as recent market history has shown, the traditional income statement is ill-suited to meeting the needs of these sometimes opposing viewpoints. As a result, investors can buy shares of a seemingly profitable company that, in fact, has poor earnings quality.
However, the author’s trademarked Earnings Power Chart combines Graham’s two personalities to reveal, in picture form, whether a company possesses authentic earnings power for long-term growth. Using the world-famous William Wrigley Jr. Company gum-maker as a case study, you will learn how to build these two alternate profit-and-loss statements to protect yourself. Since this book is written in plain English, you do not need to be an MBA or accountant to follow these step-by-step instructions.
Giving investors the tools they need to turn the tables in their favor, It's Earnings That Count The four limitations of the income statement found in every annual report, 10-K, and 10-Q A quick-hitting, five minute test to sift out the obvious losers so you can save time and focus on analyzing potential winners How to spot when a company is forging an Earnings Power Staircase—that’s your hallmark of a low-risk growth stock like Microsoft and Paychex Why the charts of Lucent Technologies, WorldCom, Enron, and Tyco signaled trouble ahead of traditional income statement. The 2 earnings power ratios you need before making your next investment 12 ways to check whether management’s interests are aligned with yours A list of 15 items to check for to make sure the companies in your stock portfolio have a competitive advantage. ( Great growth stocks always have competitive advantages.) 16 kinds of companies to avoid 20 indicators that it may be time to sell
“Well-written, intellectually sound, "accessible" to those who take the time to understand, and a poke in the eye to those who abused our capitalistic system and those (pros) who let them get away with it." -John C. Bogle, the founder and former CEO of The Vanguard Group
"In a single, easy to use index, Hewitt Heiserman captures the essence of growth and value—a most insightful approach to stock picking." -Charles W. Mulford, co-author, The Financial Numbers Game, Director, DuPree Financial Analysis Lab and professor of Accounting, Georgia Institute of Technology.
"Clear and engaging, Heiserman shows how to easily evaluate a growth company's investment potential for both conservative and aggressive investors. The result? The 'cautiously greedy' investor wins." -Tom Jacobs, Senior Analyst, The Motley Fool
“Heiserman’s unique and thorough analysis not only provides methods for avoiding companies with suspect earnings, but also uncovering the true gems that are able to grow well into the future.” -Timothy M. Mulligan, J.D., LL.M., CPA., CEO, Forensic Advisors, Inc.
“Hewitt Heiserman's innovative financial analysis techniques goes a long way towards providing an investor with an extra edge in identifying the growth stocks of tomorrow without being unduly exposed to excessive investment risk today.” -Thornton L. Oglove, Founder, Quality of Earnings Report
"This book lays the groundwork for becoming a successful long-term investor.” -Mark Sellers, Equities Strategist & Portfolio Manager, Morningstar, Inc.
"As an avid reader of investment books, I recommend this book wholeheartedly." -Arne Alsin, Real Money.com and The Turnaround Fund
“In a clear, sound and practical way, Heiserman provides an investment road map that enhances the odds of your becoming a successful long-term investor.” -Robert L. Rodriguez, Chief Executive Officer, First Pacific Advisors and two-time recipient of Morningstar Mutual Fund’s Manager of the Year
"You really do have to understand 'earnings' if you are to succeed long term in investing." -Jim Rogers, author, Adventure Capitalist and Investment Biker
"Heiserman shows investors how to uncover Wall Street earnings quackery and frauds. A must read." -Kenneth Lee, author, Trouncing the Dow
"Like a professional athlete, Hewitt Heiserman Jr. brings intensity and brainpower to the world of investing. You need the graduate school that It's Earnings That Count can provide. Buy the book and do your homework." -John D. Spooner, Director-Investments SmithBarney Citigroup and author of Confessions of a Stockbroker, Sex and Money, and Do You Want to Make Money...
This book gives you a blueprint for finding a great growth stock for the next decade without taking on a lot of risk in the process. Inspired by the writings of Benjamin Graham, It's Earnings That Count examines a firm’s earnings quality from the perspective of a “defensive” investor who wants to avoid committing ruinous mistakes as well as the “enterprising” investor who seeks Wall Street’s next great opportunities. Unfortunately, as recent market history has shown, the traditional income statement is ill-suited to meeting the needs of these sometimes opposing viewpoints. As a result, investors can buy shares of a seemingly profitable company that, in fact, has poor earnings quality.
However, the author’s trademarked Earnings Power Chart combines Graham’s two personalities to reveal, in picture form, whether a company possesses authentic earnings power for long-term growth. Using the world-famous William Wrigley Jr. Company gum-maker as a case study, you will learn how to build these two alternate profit-and-loss statements to protect yourself. Since this book is written in plain English, you do not need to be an MBA or accountant to follow these step-by-step instructions.
Giving investors the tools they need to turn the tables in their favor, It's Earnings That Count The four limitations of the income statement found in every annual report, 10-K, and 10-Q A quick-hitting, five minute test to sift out the obvious losers so you can save time and focus on analyzing potential winners How to spot when a company is forging an Earnings Power Staircase—that’s your hallmark of a low-risk growth stock like Microsoft and Paychex Why the charts of Lucent Technologies, WorldCom, Enron, and Tyco signaled trouble ahead of traditional income statement. The 2 earnings power ratios you need before making your next investment 12 ways to check whether management’s interests are aligned with yours A list of 15 items to check for to make sure the companies in your stock portfolio have a competitive advantage. ( Great growth stocks always have competitive advantages.) 16 kinds of companies to avoid 20 indicators that it may be time to sell
“Well-written, intellectually sound, "accessible" to those who take the time to understand, and a poke in the eye to those who abused our capitalistic system and those (pros) who let them get away with it." -John C. Bogle, the founder and former CEO of The Vanguard Group
"In a single, easy to use index, Hewitt Heiserman captures the essence of growth and value—a most insightful approach to stock picking." -Charles W. Mulford, co-author, The Financial Numbers Game, Director, DuPree Financial Analysis Lab and professor of Accounting, Georgia Institute of Technology.
"Clear and engaging, Heiserman shows how to easily evaluate a growth company's investment potential for both conservative and aggressive investors. The result? The 'cautiously greedy' investor wins." -Tom Jacobs, Senior Analyst, The Motley Fool
“Heiserman’s unique and thorough analysis not only provides methods for avoiding companies with suspect earnings, but also uncovering the true gems that are able to grow well into the future.” -Timothy M. Mulligan, J.D., LL.M., CPA., CEO, Forensic Advisors, Inc.
“Hewitt Heiserman's innovative financial analysis techniques goes a long way towards providing an investor with an extra edge in identifying the growth stocks of tomorrow without being unduly exposed to excessive investment risk today.” -Thornton L. Oglove, Founder, Quality of Earnings Report
"This book lays the groundwork for becoming a successful long-term investor.” -Mark Sellers, Equities Strategist & Portfolio Manager, Morningstar, Inc.
"As an avid reader of investment books, I recommend this book wholeheartedly." -Arne Alsin, Real Money.com and The Turnaround Fund
“In a clear, sound and practical way, Heiserman provides an investment road map that enhances the odds of your becoming a successful long-term investor.” -Robert L. Rodriguez, Chief Executive Officer, First Pacific Advisors and two-time recipient of Morningstar Mutual Fund’s Manager of the Year
"You really do have to understand 'earnings' if you are to succeed long term in investing." -Jim Rogers, author, Adventure Capitalist and Investment Biker
"Heiserman shows investors how to uncover Wall Street earnings quackery and frauds. A must read." -Kenneth Lee, author, Trouncing the Dow
"Like a professional athlete, Hewitt Heiserman Jr. brings intensity and brainpower to the world of investing. You need the graduate school that It's Earnings That Count can provide. Buy the book and do your homework." -John D. Spooner, Director-Investments SmithBarney Citigroup and author of Confessions of a Stockbroker, Sex and Money, and Do You Want to Make Money...
210 pages, Hardcover
First published June 2, 2003
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Displaying 1 - 6 of 6 reviews
June 2, 2014
a couple of valid points, but not earth-shattering. a co needs to self fund, and certain spending such as brand advertising or growth initiatives should not punish the co's near-term earnings or cash flow.
February 3, 2018
The good: the ideas make sense intuitively. It looks like one might be able to identify growth stocks using the earnings power chart as described in this book.
The bad: the book has not been carefully edited. There are many typos, and an important number that's claimed to be taken from a financial statement in the book, doesn't appear in the financial statement. I was left wondering if I was supposed to add/subtract couple of things in the financial statement to arrive at this number...
The ugly: I think the author doesn't take sufficient effort to make sure his audience (likely to not be finance experts) truly and exactly understand what they need to do to arrive at the earnings power chart (the whole point of the book).
The bad: the book has not been carefully edited. There are many typos, and an important number that's claimed to be taken from a financial statement in the book, doesn't appear in the financial statement. I was left wondering if I was supposed to add/subtract couple of things in the financial statement to arrive at this number...
The ugly: I think the author doesn't take sufficient effort to make sure his audience (likely to not be finance experts) truly and exactly understand what they need to do to arrive at the earnings power chart (the whole point of the book).
February 13, 2019
Few great points which make you take a pause, think for a bit. This is a great book. I did indeed learn a new way of thinking about businesses.
All these books ultimately help you understand Graham and Buffett better.
All these books ultimately help you understand Graham and Buffett better.
December 10, 2019
Decent one time reading. Key message here is to look at free cash flow conversion and EVA analysis along with the reported income statement. And use these over a time line to get some cues about the firms sources of funding for growth and ability to earn above its cost of capital.
March 10, 2019
Anybody who wants to invest in growth stocks should read this book
September 21, 2014
Its Earnings that Count: Finding Stocks with Earnings Power for Long-term Profits by Hewitt Heiserman, Jr.
How many investors have been caught in the growth stock trap and have paid the price for their faulty investment strategy? How much money have these types of investors squandered away because of their greed? Heiserman takes the same investing strategy approach that all successful stock investor have taken: the value investment strategy espoused by Benjamin Graham.
Like Graham’s book The Intelligent Investor, Heiserman sets the intelligent investor as one who establishes both defensive and enterprising income statements in conjunction with the businesses accrual income statement to create the Earnings Power Chart. If the company in question shows promise on the Earnings Power Chart, Heiserman thinks that the investor should be safe in making that investment for long-term growth and profitability. I think his evaluation has a lot of merit.
Although the idea of buy-and-hold stock investing is nothing new, the investor has to hold the right stocks. Heiserman provides a great example of a stock purchased by his grandfather, passed along to his wife when he died and to him when his grandmother died years later. The stocks had not improved in the slightest over nearly 50 years!
I found this book an easier read that the Graham book. This book contains many charts and graphs to help the reader understand the complexities of this stock selection process. Nevertheless, Heiserman suggests that completing the Earning Power Chart is a necessary process that all investors should engage in prior to making any investment decisions. Do you think Buffett makes any type of investment in a company without his due diligence coming into play? Of course not, so why should us lowly investors behave any differently? There is an obvious reason why Buffett is worth billions of dollars! I think I will follow Buffett’s lead here and invest as he does.
Investing money is a risky business at the best of time so please take all the steps necessary to protect yourself and your investment. Gain any education or knowledge about investing in general that you need or desire, invest some time in understanding balance statements and accounting methods, understand the role of buy-and-hold investing strategies, and ensure that the company you are interested in has more than just good growth rate numbers. Invest wisely.
Happy Reading,
How many investors have been caught in the growth stock trap and have paid the price for their faulty investment strategy? How much money have these types of investors squandered away because of their greed? Heiserman takes the same investing strategy approach that all successful stock investor have taken: the value investment strategy espoused by Benjamin Graham.
Like Graham’s book The Intelligent Investor, Heiserman sets the intelligent investor as one who establishes both defensive and enterprising income statements in conjunction with the businesses accrual income statement to create the Earnings Power Chart. If the company in question shows promise on the Earnings Power Chart, Heiserman thinks that the investor should be safe in making that investment for long-term growth and profitability. I think his evaluation has a lot of merit.
Although the idea of buy-and-hold stock investing is nothing new, the investor has to hold the right stocks. Heiserman provides a great example of a stock purchased by his grandfather, passed along to his wife when he died and to him when his grandmother died years later. The stocks had not improved in the slightest over nearly 50 years!
I found this book an easier read that the Graham book. This book contains many charts and graphs to help the reader understand the complexities of this stock selection process. Nevertheless, Heiserman suggests that completing the Earning Power Chart is a necessary process that all investors should engage in prior to making any investment decisions. Do you think Buffett makes any type of investment in a company without his due diligence coming into play? Of course not, so why should us lowly investors behave any differently? There is an obvious reason why Buffett is worth billions of dollars! I think I will follow Buffett’s lead here and invest as he does.
Investing money is a risky business at the best of time so please take all the steps necessary to protect yourself and your investment. Gain any education or knowledge about investing in general that you need or desire, invest some time in understanding balance statements and accounting methods, understand the role of buy-and-hold investing strategies, and ensure that the company you are interested in has more than just good growth rate numbers. Invest wisely.
Happy Reading,
Displaying 1 - 6 of 6 reviews