Category: Money tips Release Date: 2006-07-28
Fundamental analysis using select high-growth stocks, the textbooks in foreign countries generally use earnings per share growth rate as a reference indicator. And because of China's total share capital of listed companies frequently change, so earnings per share as a criterion is not accurate. With net profit growth rate to determine the company's growth is currently the most used methods. Net profit growth in the use to determine the company's growth, we should note the following points:
1, main business revenue growth Main business income, also known as the basic business income that the company in its main business or main business activities in the revenue obtained. It is the company's operating income in the account for a large proportion of a direct impact on the company's economic interests. Therefore, under normal circumstances and the main business growth in net profit growth will remain positive correlation, but because some companies in return on investment, especially investment income securities to profit more, you will see a net profit increased rapidly , but the main business revenue growth is low. Such a case does not mean that the company has good growth expectations, because it is how long the investment earnings on the durability can not be predicted.
For example, G Rainbow (000,503) in 2006 first quarter net profit year on year growth rate of 1161%, but the main business revenue growth of -18% was. See the first quarter of 2006 Quarterly Bulletin, you will find that investment income over the same period in 2005 as a -2,237,841.46 yuan, while investment in the first quarter of 2006 earnings 124,004,720.74 yuan, thereby making the relative net profit during the same period in 2005 a substantial growth, but this growth is no continuity.
Therefore, we choose a time when growth stocks in focus, while net profit growth, the main business of the same period the pace of growth should be consistent, preferably slightly higher.
Second, net profit growth rate
Because we are looking for the best growth stocks, so the operation is expected to cycle should be based on more than a year is appropriate. Therefore, with the net profit growth rate, the excellent use of net profit growth rate. This would exclude a good number of cyclical changes in the industry's quarterly net profit margin larger issues. Real estate, department store business and other industries are seasonal industry, it is selling off-season, or the financial recovery of off-season, an extremely low-quarter net profit and net profit growth rate of the chain may have been negative. Thus, net annual growth rate to carry out the vertical or horizontal comparison industry, makes sense.
To G Pioneer (600,246) as an example, the company's 2005 third-quarter net profit -13,090,190.03 yuan, but the 2005 annual report shows a net profit of 40,402,920.94 Yuan. 2004 net profit of 34,307,300.00 Yuan, while the 2004 third quarter net profit of 670,026.01 yuan. The funds withdrawn from circulation because of the real estate industry are concentrated in the fourth quarter, so if only to do with the net profit growth quarter, vertical comparison, you will find the unit was not a continuous and stable growth in net profit, do not have the growth. However, if you do use the net annual growth rate of vertical comparison, you will find this is an excellent growth stocks: 5 consecutive years of more than 15% of the annual net profit growth rate.
Therefore, the use of net profit growth, the net profit calculation cycle, the choice is crucial. The general cycle of the company's option is recommended as the base year net profit of at least three years of continuous vertical comparison in order to better reflect the company's continuous profitability, use it to determine the company's growth, when more accurate.
III quarter net profit growth rate Use quarter net profit growth rate will generally be more appropriate in both cases, one company has just listed may not be available for three consecutive years of earnings used for reference, using chain-quarter growth in net profit to determine whether the company has high growth nature; 2 is a listed company to profitability when there is still no positive growth in net profit for three consecutive years, the use of net profit growth quarter, year on year, and chain to determine whether the company will have high-growth characteristics.
Foresight to do so, you need to become well-known blue-chip listed companies (the so-called White Horse Unit) before recognizing the company's future with high growth potential. Therefore, in some cases the use of net profit quarter rate of growth is also a viable option. For example, G Tianwei (600.55 thousand) in 2001 to 2002 net profit growth rate is negative, 02 years to 2003 net profit growth rate is positive, 01 years to 2003, the average net annual growth rate is still negative . Through 04 years ago, does not appear for three consecutive years of steady growth in net profit annually. But we look at 2003 to 2004 net profit growth quarter found that in 2004 net profit quarter rate of growth than the same period last year and ring in more than 15%, so we can determine the Unit in 2004 may be just entering high into the long-term. The latter part of the company's 2004 Annual Report and 2005 Annual Report have confirmed the correctness of this view, the company's stock price movements should also permit this to judge.
4, occasional changes in Sometimes, a listed company's annual net profit or net profit quarter of a sudden change occurs, such as a sudden increase, and then back to the original growth path. This should be occasional changes in the calculation of our net profit growth removed. Mentioned earlier, G Rainbow (000,503) is one such situation. Such changes can not be calculated based on a continuous growth, it will produce bias.
