A company's future earnings is probably the most important factor in determining the future value of any given stock on the stock market. The EPS for a given stock is the total net income of a company divided by the number of shares outstanding.
Let's examine IBM's forecast results. When we sum up the dollar value of IBM's EPS for the next 4 QTRs, we get $14.41 and the last 4 QTRs of IBM generated $12.5 (Q3 2010-Q2 2011). These results suggest a possible gain of 15% in yearly earnings growth which suggests that by Q3 2012 IBM's stock could be valued at $213 and at Q3 2010, IBM's price was $185.
As new quarterly results become available (for all stocks), the forecast for the next 4 QTR will be recalculated and adjusted to take into account these latest results.
The companies presented in this report were selected because of the their various degrees of EPS growth (as measured by the gain index). We calculated the forward P/E ratio based on the next 4 QTRs EPS forecasts. This ratio can be used to evaluate future stock prices by comparing the forward P/E with the historical one.
Despite the recent volatile market conditions and the relative short time period passed since the forecast was made (August -November), there is a positive correlation between the price of the stocks and our forecast of EPS growth. The future values of stocks is a key factor to your investment sucesss whether you are expecting a BULL or BEAR market. The bottom line is, we can help you chose stock market winners.