EPS is a Misleading Indicator
Merrill Lynch (MER) has generated negative OPS (red bars) or cashless earnings over the last five consecutive years and its shares declined from $95 to $26.11, a decrease of 73% before they were rescued by the Bank of America.
The founder of StockDiagnostics.com who is a writer for Equities Magazine used this chart to recommend the sale of Merrill Lynch shares in his September 2007 article. As of September 2008, MER shares declined by 78%.
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.
|
