Quick SSG

COMPANY NAME:___________________________________________________Date of Analysis___________

	Questions	Yes	No
1	Have Sales increased continuously for 5 years? On VL look for the line labeled (10 year grid): Sales or Revenue
2	Have Sales doubled in 5 years? On VL look for the line labeled (10 year grid): Sales or Revenue
3	Have Earnings Per Share increased continuously for 5 years? On VL look for the line labeled (15 year grid): Earnings per Share
4	Have Earnings Per Share doubled in 5 years On VL look for the line labeled (15 year grid): Earnings per Share
5	Any Dividend paid during the past 5 years? On VL look for the line labeled (15 year grid): Dividends Declared per Share
6	Has Dividend Per Share increased continuously for 5 years? On VL look the line labeled (15 year grid): Dividends Declared per Share
7	Is current Operating Margin at least 15% On VL look for the line labeled (10 year grid): Operating Margins
8	Over the past 3 years, is OM stable or increasing? On VL look for the line labeled (10 year grid): Operating Margins
9	Is current Return on Equity (ROE) at least 15% On VL look for the line labeled (10 year grid): Return on Share Equity
10	Over the past 3 years, is ROE stable or increasing? On VL look for the line labeled (10 year grid): Return on Share Equity
11	Is Long Term Debt less than 33% of Equity? On VL look for the lines (10 year grid): Long-term Debt ($mil) (div. by) Share Equity ($mil)
12	Are Current Assets twice the current Liabilities? On VL look for the lines: Current Position Box…Current Assets and Liabilities
13	Is Cash Assets + Receivables greater than Current Liabilities? On VL look the lines: Current Position…Cash Assets, Receivables and Current Liabilities
14	Is Projected Growth in EPS and Dividends at 15%? On VL look for the section : Annual Rates Box...Estimates next 3-5 years
15	Is Current P/E in the range of past 5 years Ave. P/E? On VL look for this on the top of page: P/E Ratio; and line (15 year grid): Avg P/E Ratio
16	Summary: Is the Stock Worthy of SSG Analysis?

Question 1: Does company sell products that the consumer wants to buy? Increased sales for 5 consecutive years is a sign of good that the company has great products.

Question 2: We are looking for a growth rate of 15 percent per year, meaning that the company would have doubled its sales in the past five-year period. For large companies of $4 billion or more a sales growth rate of 10%, which would double every 7 years.

Question 3: This addresses the profitability record of the company. Has the company managed to be continuously profitable? Again we are looking for companies that have uninterrupted increases in EPS in the past 5 years.

Question 4: Addresses the rate of earnings growth. We are looking for a company that has at least doubled its EPS in the past 5 years, indicating a minimum of about 15% annual growth rate of profits.

Question 5 and 6: (optional): A lack of a dividend payment in a solid growth company is not necessarily negative, example: Microsoft. However, a small dividend payment that continues to increase in a solid growth company should be considered a definite positive.

Question 7 and 8: The operating margin is similar to pretax profit expressed as percent of sale. It's the difference between income and the cost to make the products. Always compare this figure to its competitors.

Question 9 and 10: ROE is management’s ability to enhance the return on company’s investments, and represents how well the management can fuel company’s internal growth using shareholders’ money. A stable ROE of 15% is respectable and 20% is superior.

Question 11, 12 and 13: These 3 questions deal with the management’s’ ability to handle long-term as well as day-to-day finances. We want to see debt less than 33% of total capitalization because companies with less debt fare better during bad times. Current assets which are twice current liabilities tells us that the company has plenty of room to meet its short term obligations. And cash plus receivables being equal to or greater than current liabilities also assures us the bills will get paid.

Question 14: We are looking for companies that have the capacity to grow at a 15% compounded rate. This will help us meet our goal of doubling our money in 5 years.

Question 15: This question is really a proxy for another question we want to ask but can’t, because it is not possible to answer it easily. That question: "Is the stock in the buy range?" However, we can "guesstimate" if the current stock price "might be" in the buy range if we were to do an SSG analysis.

Question 16: Summary: If the first 4 questions come out no, you may want to look for another stock to study. If the first 4 questions come out yes, weakness in one or two other areas could be excused for an otherwise excellent corporation, i.e., "look at the whole picture".

This is only the beginning of the selection process. If this initial screening is successful, we’ll want to know more about the company. It is very useful to know the company’s products and competitors. What is unique about this company and its products? Check out the annual report or recent quarterly report to understand the prospects for future growth. You should also read about what other analysts think about the company.

SOURCE: This guide written by Kaush Meisheri, Ph.D., NAIC - "Better Investing" magazine - March, 1998 - Page 59