New Feature: Interactive Charts with Projected Peter Lynch Earnings, Analysts' Estimates, and Forward P/E Charts

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GuruFocus
Nov 11, 2014
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We are pleased to release a new feature for Interactive Charts. We have added analysts estimates of companys revenue and earnings on the charts. From the analysts earnings estimates we have also calculated the forward P/E and the values are drawn on historical P/E chart. Furthermore, we have calculated the Peter Lynch Earnings Line for future years. Our users can also check the future projected prices based on the estimates of analysts.

Here are some examples:

1.Revenue and Earnings Line

This is the revenue and earnings line chart for Wal-Mart (

WMT, Financial). From this chart you can see the estimates of analysts on Wal-Marts sales and earnings for the years from 2015 through 2017. The area in yellow color is from the estimates.

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The growth of the sales and earnings for Wal-Mart is quite consistent. But for company like Geospace Technologies (

GEOS, Financial), the changes of revenue and earnings can be quite dramatic:

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Investors can benefit at least in two aspects from this and do future study:

  1. The chart will help you to recognize that the current growth trend for the company many not continue
  2. The revenue and earnings may still recover

2.P/E Chart

We have also calculated the forward P/E ratio based on the estimates of earnings per share and added it to the P/E (ttm) chart. Therefore the P/E (ttm) chart for GEOS now include both historical P/E and the forward P/E, as below:

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We can see that although GEOS has quite low P/E of single digits right now, its future P/E is actually much higher due to the dramatic decline of future earnings.

This can serve as a very useful warning sign for investors.

3.Peter Lynch Earnings Line and Projected Future Prices at Fair Valuations

Since now we have some idea about future earnings, we can extend Peter Lynch Earnings Line to the future. The example we show here is from IBM (

IBM, Financial). Peter Lynch Earnings Line for IBM can now be drawn into Sept. 2016. If the analysts estimates are any guide, IBMs earnings are expected to be back to its long term trend. At the current prices, IBM stock will be far below its long term earnings line. Therefore most likely that the stock price will not stay as low as it is today.

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The chart also allows you to draw the earnings line at customized P/E ratios. For instance, in the case of Cognizant Technology (

CTSH, Financial), if the stock price stays in the vicinity of its 10-year median P/E ratio of 26 over the next two years, the upside potential for the stock can be as much as 60% in the next two years:

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When using these charts please keep in mind that it is very normal that analysts make wrong estimates. But adding these indicators does provide a headup if you have missed this in your own research.

We hope you like this new feature.Please let us know if you have any comment. Please leave the comments below.

The unlimited use of Interactive Charts is for Premium Members only. If you are not a Premium Member, we invite you for a 7-day Free Trial.

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