Regal Assets Analytics

GEO Investing

Non-GAAP – The Pragmatic Approach to Earnings Analysis [GeoWire Weekly No. 66]

In 2016 we addressed the dichotomous approach to understanding the differences between generally accepted accounting principles (GAAP) and non-GAAP earnings. There are ways they should be scrutinized when trying to get a sense if numbers being reported by a company are a true representation of what is going on at the net income level. Non-GAAP financials are also referred to as “adjusted.”  For example, “adjusted earnings per share (EPS) or “adjusted earnings before interest taxes & depreciation & amortization (EBITDA).

Because we plan on delving into this subject in a Tweet thread that we anticipate will engage our investor network and extensions thereof, we feel it is a good idea to give another primer on the subject, especially since GeoInvesting’s Premium Subscriber base has grown substantially since 2016.

If part of your investment strategy is executing bullish or bearish short-term stock trades on earnings report news flow, it’s extremely important to understand if the GAAP and Non-GAAP earnings per share numbers being reported in a press release are “clean”.

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When Cyclical Stocks Become Relevant, Here’s A Strategy You Can Use [GeoWire Weekly No. 65]

The sales, earnings and thus share prices of cyclical stocks (cyclicals) tend to fluctuate with the overall economy and are associated with industries that are heavily affected by the economic cycle and consumer demand. (Example: stocks in the automotive, airline, hospitality, housing, building material and retail industries).

Cyclicals do well when the economy is strong and consumer demand is high, and conversely, can suffer when the economy is weak and consumer demand is low. This makes them an attractive investment class for those who are skilled at identifying economic trends or when it becomes fairly obvious that an economy is peaking or bottoming.

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Putting Trust in Management Commentary Can Be Tricky At Times [GeoWire Weekly No. 60]

There’s going to be certain times when you need to think twice before believing bullish commentary from management teams. You need to understand that that bullish commentary can change on a dime. I learned this lesson when considering investing in some technology stocks right before and during the dotcom bust. At that time, as risk was escalating, many technology company management teams I interviewed commented that they saw no problem with their industry. They assured me that they’d be able to navigate an economic slowdown. Well, that couldn’t have been further from the truth as many of these companies pivoted on their bullish stance just weeks after these interviews.

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Whether it be the lottery or a stock, getting diluted kind of sucks [GeoWire Weekly No. 57]

On most occasions, our microcap company standard of 50 million or less shares outstanding is and will always be unwavering. Now, you’re probably saying, ”it’s not the number of  outstanding shares that matters, it’s the value per share of certain statistics like earnings per share and valuation ratios like price to earnings and price of sales multiples that matters when determining if a stock is undervalued.”

While this may be technically true, think about it this way – A company that has a lot of outstanding shares may be giving you a clue that multiple offerings came about because the company was unable to use the money it’s been raising to grow cash flow, potentially raising red flags on the effectiveness of management.

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When Others Hate Your Microcap Stock with Big Cap Appeal [GeoWire Weekly No. 56]

My analyst team at MSM thinks it may have found what will be a classic successful ‘Big Cap Microcap’ (BigCapMicro) case study in a company that provides healthcare communication solutions internationally, delivering clinical information to care teams to enhance patient outcomes (clinical communication technology to hospitals). The company has two divisions, wireless (traditional paging) and related software services to manage the flow, delivery and analysis of communication. Some of its services include subscriptions to one-way or two-way messaging, voicemail services, call center services, equipment loss or maintenance protection, and selling devices to resellers who lease or resell them to their subscribers.

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GeoWire Monthly, Vol. 2, Issue No. 8, September 2022

This month, we are changing things up a little to highlight some useful video clips and discussions that will give you a glimpse into the personalities that have paved the way for many investors in how they approach different strategies to find the best stocks in the market.

This month we wanted to highlight a particular theme that is relevant in today’s market environment –  dealing with volatility and our belief that traditional value investing strategies are about to stage an epic comeback.

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Continuing to Converse About the Strategies Behind GeoInvesting’s Stock Idea Discovery [GeoWire Weekly No. 47]

It’s ironic that company filings, earnings conference call transcripts, social media, letters to shareholders, data sources, and the internet have made it easier for investors to find InfoArb and use it to their advantage, but so many fail to do so. Why? Besides possibly not having a time to go through all these sources of information, now that more information is available than ever, it’s everywhere, so where do you start?

We find the conference call transcripts to be particularly valuable resources. It’s exciting to know that when companies report their quarterly earnings, the “accomplice” to great findings might be that not-so-well-attended live conference call. The call’s transcript will then reside on platforms like Seeking Alpha and Sentieo, which we happen to subscribe to.

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