It's Earnings That Count: Finding Stocks with Earnings Power for Long-Term Profits [Paperback]

Hewitt Heiserman (Author)

Book Description

Publication Date: September 14, 2005 | ISBN-10: 0071463992 | ISBN-13: 978-0071463997 | Edition: 1

It’s Earnings That Count introduces the Earnings Power Box™— a tool for identifying companies with a wide gap between their accrual performance and earnings. Features include six ratios investors can use to make smarter decisions, techniques for identifying companies poised to outgain the market over the next five to ten years, and more.

Editorial Reviews

From the Back Cover

Praise for It's Earnings That Count:

"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, Founder and former CEO of The Vanguard Group

"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 for The Motley Fool

"In a single, easy-to-use index, Heiserman captures the essence of growth and value--a most insightful approach to stock picking."
--Charles W. Mulford, professor of accounting at the Georgia Institute of Technology and coauthor of The Financial Numbers Game

"A great addition to the literature! Hewitt Heiserman has crafted an easy-to-read, basic tutorial on avoiding the most common mistakes caused by accounting phony baloney--combined with some age-old investment wisdom. Mandatory for the intermediate investor."
--Kenneth L. Fisher, CEO, Fisher Investments Inc., and Forbes's "Portfolio Strategy" columnist

If recent history has taught anything, it is that published financial reports can be questionable and even misleading to investors looking for solid investment targets. It's Earnings That Count shows you how to look beyond reported figures to find those needle-in-the-haystack companies that possess consistently high-quality earnings growth--the best indicator of a stock's long-term investment potential.

About the Author

Hewitt Heiserman Jr., is a veteran quantitative research analyst with firms including Fidelity Investments and American Holdco. He is a columnist for TheStreet.com and the founder of EarningsPower.com.

Product Details

• Paperback: 224 pages
• Publisher: McGraw-Hill; 1 edition (September 14, 2005)
• Language: English
• ISBN-10: 0071463992
• ISBN-13: 978-0071463997
• Product Dimensions: 9 x 6.1 x 0.6 inches
• Shipping Weight: 11.2 ounces
• Average Customer Review: 4.6 out of 5 stars  See all reviews (14 customer reviews)
• Amazon Best Sellers Rank: #786,505 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

40 of 42 people found the following review helpful:

5.0 out of 5 stars Combine Graham & Economic Value Added in one chart, December 1, 2003

By 

John C. Dunbar (Sugar Land, TX United States) - See all my reviews
(REAL NAME)   

This review is from: It's Earnings That Count : Finding Stocks with Earnings Power for Long-term Profits (Hardcover)

This book describes a fundamental approach to stock selection. It combines the "margin of safety" approach using free cash flow of Graham with the Economic Value Added (EVA) approach of determining returns in excess of its weighted average cost of capital. The author charts these new Defensive EPS and Enterprising EPS so you can see if they meet a minimum test.

The book is easy to read and the techniques are easy to apply. The author also gives you some extra ratios to help screen out your long term purchase candidates.

It's not a deeply academic book but more of a presentation of practical advice and a proprietary fundamentalist stock selection system that will keep you out of trouble. The author also discusses how to evaluate management and how to evaluate competitive advantange. These chapters were also good.

There are many interesting examples in the book. The book makes it look simple but I'm sure there are many areas in financial statment analysis where you'll be scratching your head to create these new EPS figures. Still, overall the book is great.

John Dunbar
Sugar Land, TX

21 of 23 people found the following review helpful:

5.0 out of 5 stars One of the Best Investment Books Around, June 22, 2004

By 

lostpros (Edgewood, KY United States) - See all my reviews

This review is from: It's Earnings That Count : Finding Stocks with Earnings Power for Long-term Profits (Hardcover)

Could you have predicted the downfalls of Enron and MCI Worldcomm? Could you have predicted the meteoric rise in Dell? Now you can with the tools Mr. Heiserman provides us in this must read.

Whether you are a beginner or expert, the book gives everyone tools that they can use in their investment approach. First, the book discusses what to look for in companies. Chapters 5 through 7 are my personal favorites. These provide the investor with the structure and format to analyze companies. The premise is that you need three sets of earnings statements to accurately analyze a company. The first is the enterprising income statement that allows you to deetermine if a company can create value for its investors. The second is the defensive income statement that allows you to determine if a company can self fund (does it need to borrow money or can it grow from within). The third is the plain, old income statement (called accrual income statement), which focuses on what was reported. Mr. Heiserman shows you how to chart these earnings to determine if the company you are analzying is the next Dell, Enron, or something in between.

Finally, he explains to the reader a valuation technique (the Croesus Test). This allows the reader to understand and appreciate whether now is the right time to buy.

On a personal note, after reading the book I read an article he wrote regarding Sanderson Farms. He recommended that it be purchased based upon the methodology used in the book.

I then emailed Mr. Heiserman and pointed out that my own valuation techniques showed this company to be overvalued. Surprisingly, Mr. Heiserman is both accesible and generous with his time. He emailed me back several times and almost immediately. Since his article, Sanderson Farms is up an astounding 93% (split adjusted price of $27 at the time of the article). In the meantime, the market has been flat. I guess I was wrong.

In any event, if you are looking for a method that works and an easy to learn format, this book is for you.

9 of 10 people found the following review helpful:

5.0 out of 5 stars Must-Read for Every Investor, December 16, 2003

By 

Adam J. Peck (Miami, FL) - See all my reviews

This review is from: It's Earnings That Count : Finding Stocks with Earnings Power for Long-term Profits (Hardcover)

It's Earnings that Count should be on every investor's bookshelf. Whether you are a seasoned investor with an extensive background in accounting or just a beginner, this book is a must-read. Hewitt Heiserman effortlessly incorporates Benjamin Graham's defensive and enterprising perspectives into one easy-to-use system to determine a company's true earnings power. While these two methods are well known to the avid investor, Mr. Heiserman presents them in a fresh visual perspective, which through example, empowers the reader to not only learn how to discover the next Microsoft, but also how to avoid the next Enron or WorldCom.