Expert: Paul Henneman - 10/8/2007

Question
Hello,
I found a site (http://www.winninginvesting.com/stock_analysis_checklist.htm) with some ideas on how to research potential investments and the next-to-last category (Forecast Revenue Growth Rate) is written such that I'm not sure how to do what the guy says to do. Here's what it says if you don't want to go to the site:
Use your calculator to compute the forecast revenue growth percentage for the current quarter from the corresponding year-ago quarter.

O.K. to buy if the forecast year-over-year revenue growth is at least 80% of the “1-Year” growth found in the previous step.

The company I'm looking at is Flotek Industries (http://finance.yahoo.com/q/ae?s=FTK)

Thanks!

Answer
Matt,
  Thank you for your question! I agree, the way that is written certainly is not very clear. Here is what I believe the writer is trying to say:

You need two data points:

1. the forecasted revenue growth for the company you are interested in for the current quarter.

2. the forecasted revenue growth for the company during the quarter from 1 year ago.

Use these two numbers to compute the overall revenue growth in percentage for the past year.  This will give you the '1-Year growth' data point he mentions.

If the year over year revenue growth is at least 80% of the 1 year growth that you have just hopefully computed, he apparently says it is ok to buy.

I hope this helps!

Best Regards,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com