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Under review

HIMX PE looks wrong

808Amigo 4 months ago • updated by SA Admin Daniel Hochman 4 months ago 6

HIMX forward PE at 166 based on forward EPS of .03 but Yahoo finance lists average of 7 analysts with 2019 EPS estimate of .20. Looks like Seeking Alpha is using a next quarter EPS estimate instead of full year. Lowest of 7 analyst 2019 estimates is .05

Under review

We're investigating. Thanks.

Hi,

For the upcoming fiscal year FY2018 (which has not ended yet) Yahoo Finance shows an EPS estimate of 0.05. We show 0.03. Nasdaq shows 0.02. This all depends on the data provider and the brokers providing the estimates. 

For FY2019, Yahoo shows 0.20 and we show 0.17. 

For forward PE we currently use the upcoming FY estimate. This could be 12 months away or 1 month away depending on the time of the year and when the company's fiscal year ends. This is the methodology most data providers use.

2 other options are:

1) Use the 2nd upcoming fiscal year. This can be between 13 to 24 months into the future.

2) Use the four upcoming quarters EPS estimate. The issue here is that many analysts only provide fiscal year end estimates, not quarterly estimates, so the overall consensus isn't as accurate. 

Would love to hear your thoughts about your desired methodology. 

      Thanks,
      Daniel

      Hi Daniel,

      The first thought I have is this should be looked at from the point of view of the consumer of the data. The forward P/E ratio of 166 (now 154) may be correct, according to the rules used to calculate it. But it is fairly useless information for a reader, and even worse, it is likely misleading. That is not a desirable situation.


      For the financial models I have developed I took on board Michael Boyd's suggestion to publish both historical and projected non-GAAP P/E ratios to get a truer comparison between past and projected ratios (see my article https://seekingalpha.com/article/4222814-archer-daniels-midland-risk-opportunity ). The large tax adjustments at December 31, 2017, for most companies, have distorted ttm GAAP results throughout 2018, making them useless for comparison purposes. I agree with not using future quarterly estimates because of a different mix of analysts. There is a further distortion due to the various analysts giving different weightings to quarters. So the "high" analyst for a year could also have the "low" estimate for a particular quarter. 

      I would recommend you resolve this by publishing 2 forward P/E ratios - FY 2018 non-GAAP P/E (FWD) and FY 2019 non-GAAP P/E (FWD). To me that is useful, actionable information and there is absolute clarity. SA can set the standard here - others will almost certainly follow.

      If anyone would like a free no obligation trial of my 1View∞Scenarios™ financial models please PM me and I will arrange.

      Thanks Robert!

      We will soon be adding the FWD PE for every fiscal year where estimates are available. This will be shown on the "Earnings" tab on our quote pages. 

      We sometimes need to show only 1 FWD PE (like in summary units) - for example on our default quote page, to the right of the chart. Which one would you choose to put there?

      Thanks,

      Daniel

      Hi Daniel,

      That is a hard one. 


      What you do need to be careful with is being consistent, So for AT&T (T) you presently show an EPS (FWD) of $3.50, a P/E (FWD) of 8.68, and a share price of $29.67 ($29.42 yesterday). But 8.68 X $3.50 equals $30.38 and $29.42 divided by $3.50 = 8.41. So the EPS and P/E ratio quoted are not consistent.

      Well that has given me time to reflect further on your question. Is a forward P/E useful if I cannot see how it compared to the current P/E? I might prefer to just see the current P/E on the default page if there is only room for one.


      But assuming, you wish to show a forward P/E then I might prefer to see the current year forward P/E shown at the beginning of the fiscal year. That might change after the 2nd or 3rd qtr earnings release at which time start showing the following fiscal year P/E. The important thing would be to ensure clear labelling of which fiscal year the P/E relates to.

      Hi Robert,

      Our FWD PE Ratio is updated once a day and uses the previous close price. In this case, it's taking the closing price from 2 days ago. We should fix that to take the close price from the most recent market close. But the EPS shown and the PE are using the same data.

      Thanks,

      Daniel