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sean  
#1 Posted : Tuesday, August 5, 2014 2:08:51 PM(UTC)
sean

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This came up a few years ago, but I have had a few questions lately that prompted me to re-post this information about the judgment that happens when you click the Show me Toolkit's Judgment button on the first impression. Aside from knowing the basic ideas behind the judgment, it's important to keep in mind that the judgment is entirely mechanical in nature; the entries that result when using the Show me Toolkit's Judgment button were not thought out ahead of time; they are calculated by Toolkit the moment you click the button. That in mind, here is a plain English description of the selections that Toolkit 6 makes when you click that button.

Sales and EPS growth are projected at the lower of the last 9-year or last 1-year historical rates. For the most part this means that if a company has a bad year, the EPS will be listed as having zero projected growth. You may also see cases where the historical "weight" of several bad years can outwiegh a single good year of sales or Earnings.
As well, EPS is never projected to grow faster than sales. This means that if the sales for a company are projected to have zero grwoth, then the EPS will show the same, even if the Earnings have gone up during the same time period.

The projected high P/E ratio considers the average high P/E Ratios of the last five years on a weighted basis eliminating the highest high P/E Ratio, and is capped at 30.

The projected low P/E ratio considers the average low P/E Ratios of the last five years on a weighted basis eliminating the highest low P/E ratio, and is capped at 20.

The projected low price is by default the projected low P/E ratio times TTM EPS, but will never be higher than 80% of the current price.

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