EPS is a Misleading Indicator
Lehman Brothers Holdings Inc. (LEH)
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A.G. Edwards, Inc. (AGE)
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Broker A.G Edwards (AGE) was acquired at a price of $84 per share by Wachovia. Prior to being acquired AG Edwards reported positive OPS (green bars) for five consecutive years.
Lehman Brothers (LEH) reported negative OPS (red bars) for five consecutive years and positive EPS for four consecutive years. EPS proved to be a false indicator of Lehman's' value since it did not reveal the weak underlying cash flow condition. Subsequently Lehman filed for bankruptcy and its shares fell from a high of $85 to a low of .25 per share on September 25, 2008, representing a 99% decline.
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The validity of EPS (earnings per share), long considered by Wall Street to be the leading predictor of value, is being challenged by OPS (Operational-cashflow Per Share). StockDiagnostics.com monitors cash flow for over 10,000 companies and is the exclusive publisher of OPS data.
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Lehman Brothers Holdings Inc.
BankUnited Financial Corporation
Morgan Stanley
Merrill Lynch
Goldman Sachs
Under Armour vs. Nike
Sears
uDate and Lending Tree
AstroPower vs Suprema
Amazon vs Sears
WebMD vs Circuit City
Hoover's vs Astro Power
Numerical vs Suprema
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