It's Earnings That Count : Finding Stocks with Earnings Power for Long-term Profits

Rating:
Summary: One of the Best Investment Books Around
Review: 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.

Rating:
Summary: One of the Best Investment Books Around
Review: 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.

Rating:
Summary: Mr. Heiserman is a stand up guy!
Review: I had the wonderful opportunity to speak with him, before and after reading the book. I was impressed at the amount of time he took to research and develop his ideas into concrete strategies and examples that everyday investors can use.

As the author of the book Futures for Small Speculators and several other books on high-risk investments- I thought that I would find the information rather boring- and treading over the same old tired reasons to buy and hold stocks.

This was never the case. Mr. Heiserman proved to me that the same kind of concentrated effort that I use to trade fast moving markets, can and should be applied to stock picking for the long term.

Buy a copy of this wonderful book if you intend to retire with a decent nest egg.

Noble DraKoln
Liverpoolgroup.com

Rating:
Summary: Good but not enough
Review: It does not provide investment strategy, when to buy and when to sell. It concerns self-financing and return on capital employed only. Insufficient for a novice investor.

Rating:
Summary: Good but not enough
Review: It does not provide investment strategy, when to buy and when to sell. It concerns self-financing and return on capital employed only. Insufficient for a novice investor.

Rating:
Summary: Must-Read for Every Investor
Review: 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.

Rating:
Summary: Combine Graham & Economic Value Added in one chart
Review: 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

Rating:
Summary: Superb Book
Review: This is an excellent book which will help you see beyond the simple "E" in P/E to the quality and sustainability of a company's earnings power