Welcome to FAST Graphs - the Fundamentals Analyzer Software Tool that makes investing easier!
When you research stocks with FAST Graphs, we recommend you utilize all the analytical horsepower that FAST Graphs has to offer. FAST Graphs defaults to adjusted (operating) earnings because we believe operating earnings best describe how the business is doing. Furthermore, this produces the best earnings and price correlation in order to base valuation decisions on. There is no one single metric that is superior to the others, in our opinion. It is the collective insight that each fundamental metric brings.
FAST Graphs automatically utilizes the appropriate formula which is driven by the earnings growth rates achieved by the company over whatever timeframe is being drawn.
The orange line is the intrinsic value line.
When the black price line is below the orange line, that’s indicative of an undervalued stock.
When the black price line is on the orange line, that's fairly valued.
When the black price line is above the orange line, that's overvalued.
The more the black line is below the orange line, the better the margin of safety.
Essentially, the key to the successful implementation and utilization of FAST Graphs is to also review all the timeframes, and also draw each company utilizing all the earnings and cash flow options provided in order to get the most comprehensive perspective that FAST Graphs are capable of providing you.
The Historical graphs provide you historical information. This includes historical growth rates, normal P/E ratios, earnings per share, dividends, etc. In other words, they tell you what has happened and how the stock price has reacted to what has happened. One of those pieces of information is whether earnings growth has accelerated, decelerated or stayed the same.
Forecasting graphs, it’s important to note the difference between the growth rates expected going forward versus historical. To summarize and simplify, the historical graphs show what has occurred regarding a company’s growth and how the market has valued the company based on that growth. In contrast, the forecasting graph is providing consensus estimates of future growth, which may differ materially from the past. Although we recommend reviewing both historical and forecast results, we suggest that valuation and/or buy, sell or hold decisions be based primarily on the future (forecasting). Although we can learn from the past, we can only invest in the future.
There are five sets of calculators, the first two - Estimates and Normal Multiple - are based on specific consensus analyst estimates 1 to 3 years forward depending on the company and how many analysts are following it. These specific estimates and the number of analysts come directly from FactSet.
The third calculator, LT Growth Calculator is driven from an additional long-term (3 to 5 year) growth rate estimate. This is actually a different estimate that applies to the longer-term. The FAST Graphs calculator where these long-term estimates apply is the “3-5Y TL Growth” calculator. It is solely based on the long-term growth rate and is drawn as a trend line (TL indicates trend line). With this calculator, the near-term estimates should be ignored and only the last year or two’s numbers should be evaluated. The reason for this is because earnings growth is simply extrapolated out based on the 3 to 5 year growth rate separate estimate described above.
The final two calculators are not specifically based on estimates. Historical CAGR Calculator allows you to input various historical growth rates as a proxy for estimates, and the final calculator is a Custom Calculator that allows you to put in your own inputs.
It’s important to understand that FAST Graphs™ is a dynamic tool. In other words, when you draw different timeframes, FAST Graphs automatically calculates the different growth rates that apply to those different timeframes. Just like our tool, a company’s growth rates are dynamic and change over time. This is why we designed FAST Graphs to be able to run Earnings and Price Correlated graphs over timeframes as short as the last recent 2 years all the way up to 20 years of history. With this in mind, one of the best ways to use FAST Graphs to analyze a company is to start out running charts of 15 years (or even 20 years), followed by running shorter graphs.
First start with a 20-year graph, then run a 15-year graph, then run a 10-year graph, then run a 5-year graph, followed by a 3-year graph. This exercise allows you to determine whether a company’s earnings growth rate is accelerating, decelerating, or even staying the same. Furthermore, since the tool automatically applies the appropriate valuation formulas, you are also able to ascertain a better perspective of current fair value.
The blue normal P/E ratio line is telling you what valuation the market has normally applied to the stock for the period that you are graphing. It does not necessarily indicate that the stock is fairly valued or undervalued. However, you need to understand that that does not necessarily mean that the stock is fairly valued if it trades on that line. In other words, it’s simply a piece of information telling you how the market normally prices the stock. On cases when the normal P/E ratio (the blue line) is way above fair value, I will personally not buy the stock just because the market has been pricing it that way.
FAST Graphs uses a Blended P/E – By Blended P/E, we blend the most recent fiscal actual earnings reported number with the most current estimate. We feel this is a more accurate P/E.
FAST Graphs reflects dividends in three different iterations. The first is the light green shaded area stacked on and above the orange line which depicts dividends after they have been paid out of earnings.
The second iteration of the honeydew colored line (it appears white on some monitors) is simply a plotting of each year’s dividend. This line serves two purposes. First of all, it allows the subscriber to determine whether dividends are rising steadily or if there have been previous dividend cuts. For example, when the dividends are stacked on top of the earnings line of a cyclical company, it could create the illusion that dividends were cut because the green shaded area would fall with earnings when, in fact, dividends were not cut. The honeydew line allows that to be quickly determined.
Third is the Dividend Yield Line (Maroon in color) on the graphs.
FAST Graphs are very simple. They depict the business behind the stock (the orange line and green shaded area), and how the price correlates with the company’s business results (the black weekly closing stock price). FAST Graphs show you the operating record of the business behind the stock first, and then overlays the price to see how it follows and correlates with the company’s operating results.
Please take advantage of all our documentation and tutorials we have on the website, and if you need any help, please let us know.
Team FAST Graphs
Updated 19 days ago