The Profit Map™ leverages big-data analytics and advanced mathematical modeling to provide highly reliable forecasts of future stock prices.

Users can input their estimates of a company’s future earnings, profit margin, P/S, and P/E ratios, and the model calculates the precise future price of a stock for dates selected by the user. The Profit Map™ offers a level of predictive precision that allows users to greatly reduce, avoid and prevent losses. It also allows users to identify when a stock may provide an exceptionally low entry point with a highly prospective statistical probability of producing outsized gains.

To start using the Profit Map™, type a stock symbol and a date into the blue input boxes, and then click the large green “Go” button. The tool will run a series of analyses and load that data onto several tabs on the page. You can track the progress of this process in a text box to the right of the “Go” button.

Current Financials

The “Current Financials” tab provides an overview of the current financial condition of your selected stock and its revenue growth rate and profit margin over the past five years.

  1. Basic Information: This section provides fundamental details about the company, including its name, the sector it operates in, and its specific industry. This information helps frame the context in which the company conducts its business.
  2. Basic Financial Data: Here, you’ll find key financial metrics such as revenue, net income, and tangible equity. Additionally, this section includes analysis of the company’s revenue growth rates and profit margins over the previous 1, 3, and 5 years, offering a snapshot of its financial performance and trends over time.
  3. Variance Data: This part of the Profit Map focuses on the company’s variance metrics. High variance indicates greater unpredictability in the company’s financials, suggesting potential higher risk. This metric is crucial for investors looking to understand the stability and risk profile of the company.
  4. 10-Year Price History Chart: This interactive chart displays the stock’s price history over the past decade. Users can enhance the chart by adding data overlays for revenue, net income, or price-to-sales ratio, providing a visual correlation between these metrics and stock price movements.
  5. Price History Highlights: This section highlights significant points in the last 10 years of the stock’s price history, such as the first date recorded, the highest and lowest price-to-sales (P/S) ratios, and the current date’s P/S ratio. It provides a quick reference to understand how the stock has valued over time relative to its sales.
  6. Historic Ratings: Summarizing the best and worst times to have purchased the stock based on ERS’s historical risk ratings, this section guides investors on timing their investments. The dropdown next to the green button allows users to set how far back the tool searches for these optimal and suboptimal buying periods, offering tailored insights based on historical performance and risk assessment.

Historic Data

The “Historic Data” tab offers a longer look back into the company’s history, showing not only 10 years of its most common financial metrics, but also an analysis of where the company’s price to sales and price to earnings ratios lie compared to the range they have occupied historically. This can give an idea of whether or not the current price to sales or price to earnings is low, average or high relative to its past.

The table displaying the last 10 years of financial statement data provides a comprehensive overview of key financial metrics that are essential for evaluating a company’s economic health and growth trajectory. Each column is designed to give investors and analysts a snapshot of the company’s financial position and changes in its capital structure over the decade. By reviewing this data, one can assess trends such as revenue growth, changes in equity, and shifts in shareholder composition, all crucial for making informed investment decisions. The table not only serves as a historical record but also as a tool for projecting future performance and stability.

These two tables offer a detailed look at a company’s valuation metrics over several timeframes, specifically focusing on Price to Sales (P/S) and Price to Earnings (P/E) ratios. Here’s a breakdown of the information in the table:

  1. Lookback Period: This column displays different time periods: 10 years, 5 years, 3 years, 1 year, and the current status.
  2. Minimum P/S: Lists the lowest Price to Sales ratio recorded during each respective period.
  3. Median P/S: Shows the median Price to Sales ratio, offering a middle value that represents typical valuation during each period, reducing the effect of outliers.
  4. Maximum P/S: Provides the highest Price to Sales ratio observed during each respective period.

These tables are particularly useful for investors looking to gauge how the company’s market valuation has fluctuated over time in relation to its sales and earnings, which can inform decisions on buying or selling the company’s shares based on historical valuations.

These tables provide an insightful overview of valuation metrics within an industry, focusing on the Price to Sales (P/S) and Price to Earnings (P/E) ratios over various lookback periods. Here’s a detailed description of the tables:

  1. Lookback Period: Time intervals are shown (10 years, 5 years, 3 years, and 1 year), reflecting the periods over which data has been compiled.
  2. Minimum P/S or P/E: Displays the lowest Price to Sales ratio observed in the industry during each specified period.
  3. Median P/S or P/E: Highlights the median Price to Sales ratio, which is critical as it represents the central tendency of the industry’s sales valuation, providing a benchmark against which individual company ratios can be compared.
  4. Maximum P/S or P/E: Indicates the highest Price to Sales ratio that has been recorded in the industry over each period.

Understanding the median values of P/S and P/E ratios for an industry is particularly valuable for several reasons:

  • Benchmarking: Median values serve as a benchmark for comparing individual companies within the same industry. A company significantly above or below the median may require further investigation to understand the reasons behind this deviation.
  • Investment Decisions: Investors can use these median metrics to identify whether a sector is generally overvalued or undervalued relative to historical norms.
  • Trend Analysis: Tracking the median over time helps in understanding how the industry’s valuation norms are changing, which could be driven by broader economic conditions, technological advancements, or shifts in consumer behavior.

These tables, by providing a clear and concise view of industry-wide financial ratios over significant periods, are an indispensable tool for investors looking to deepen their analysis and make informed decisions based on comprehensive industry trends and standards.

What Must Happen

The “What Must Happen” tab answers the question: if you want to make at least X percent per year on this stock, and you want to hold it for Y number of years, what will the financial metrics of the company have to look like for that to become a reality?

  1. Set Your Financial Goals:
    • Desired Annual Return (%): Enter the percentage of the annual return you wish to achieve from your investment.
    • Years Later: Specify the number of years you plan to hold your investment.
  2. Adjust Revenue and Profit Expectations:
    • Annual Revenue Growth (%): Input the expected annual growth rate of the company’s revenue. The default value is the company’s current 5-year average growth rate, but you can modify it based on your expectations.
    • Future Profit Margin (%): Enter the projected profit margin. This figure is also set to a default based on historical data, but can be changed to reflect anticipated changes in profitability.
  3. Calculate Projections:
    • Click on the Calculate button to generate a table of results. This will provide a detailed forecast based on the assumptions you’ve input regarding return, growth, and profitability over the specified period.

The results table you see after clicking “Calculate” provides a detailed projection of the financial metrics necessary to achieve your specified goals. Here’s how to interpret the data in each column of the table:

  1. Metric Name
  2. Current: This column shows the current value of each financial metric listed. These values are the most recent data available for metrics like Price, Market Cap, Revenue, P/S Ratio, and P/E Ratio.
  3. 10-Year Median: This column is relevant only for the P/S (Price-to-Sales) Ratio and P/E (Price-to-Earnings) Ratio. It displays the median value of these ratios over the past 10 years, providing a historical benchmark.
  4. Required Future: These values indicate what each metric needs to reach in the future, based on your input assumptions, to achieve the desired annual return rate. For example, the price of the stock must increase to a specified amount, the market cap must grow significantly, etc.
  5. Explanation: This column provides a textual explanation of what needs to happen for the metrics in column 6 to be achieved. For instance, it explains the revenue growth required, or the necessary P/S and P/E ratios, to realize a 25% price gain per year over the specified period.

The bottom-most section of the tool is designed to help users critically assess their assumptions and predictions about the financial future of a company:

  1. Critical Assessment Questions: This list of questions is intended to provoke deeper thinking and evaluation of the assumptions you’ve entered earlier. They cover a range of topics from the likelihood of the selected company achieving a specific market cap and revenue target, to historical precedents of similar growth in other companies. The questions are designed to ensure your forecasts are realistic and grounded in historical data and economic context
  2. Interactive Questions: The questions highlighted in blue are interactive and can be clicked on. Once clicked, they generate a list of stocks or provide data that begins to answer the question. This feature allows you to see comparable historical examples or current market data that relate to your query, facilitating a better-informed financial analysis.

Future Return by P/S Ratio

The tab “Future Return by P/S Ratio” examines the future from a different perspective. Rather than assume a certain rate of return and build a potential future around that assumption, this tab asks the question: “What if this stock’s Price to Sales ratio is lower or higher in the future than it is now?” and determines how much the stock’s price will go up or down if the future P/S ratio really is lower or higher.

  1. Input Assumptions:
    • Years Later: Enter the number of years you want to forecast ahead. This is the period over which you wish to project the company’s growth and performance.
    • Annual Revenue Growth (%): Specify the expected annual growth rate of the company’s revenue. The default value provided is based on the company’s average growth over the past five years, but you can adjust this to fit your projections or different scenarios.
    • Expected Future P/S Ratio: Input the Price-to-Sales (P/S) ratio you anticipate the company will achieve in the future. This ratio is crucial as it helps evaluate the stock price relative to revenue generation.
  2. Generate Projections: Click the Calculate button to process your inputs and generate a table of projected results. This will show how the company’s financial metrics might evolve over the specified period based on your assumptions.

The results table you see after clicking “Calculate” provides a detailed projection of the financial metrics necessary to achieve your specified goals. Here’s how to interpret the data in each column of the table:

  1. Metric Name
  2. Current: This column shows the current value of each financial metric listed.
  3. Required Future: These values indicate what each metric needs to reach in the future, based on your input assumptions, to achieve the desired annual return rate. For example, the price of the stock must increase to a specified amount, the market cap must grow significantly, etc.
  4. Explanation: This column provides a textual explanation of what needs to happen for the metrics in column 5 to be achieved. For instance, it explains the revenue required for the future P/S to reach your selected value or the change in the price based on that ratio.

Future Return by P/E Ratio

The “Future Return by P/E Ratio” tab is very similar to the previous tab. The primary difference is that instead of making an assumption about the future price to sales ratio of a company, now we’re going to make an assumption about the future price to earnings ratio of that company.

  1. Input Assumptions:
    • Expected Future P/E Ratio: Input the Price-to-Earnings (P/E) ratio you anticipate the company will achieve in the future. This ratio is crucial as it helps evaluate the stock price relative to revenue generation.
    • Years Later: Enter the number of years you want to forecast ahead. This is the period over which you wish to project the company’s growth and performance.
    • Annual Revenue Growth (%): Specify the expected annual growth rate of the company’s revenue. The default value provided is based on the company’s average growth over the past five years, but you can adjust this to fit your projections or different scenarios.
    • Future Profit Margin (%): Enter the projected profit margin. This figure is also set to a default based on historical data, but can be changed to reflect anticipated changes in profitability.
  2. Generate Projections: Click the Calculate button to process your inputs and generate a table of projected results. This will show how the company’s financial metrics might evolve over the specified period based on your assumptions.

The results table you see after clicking “Calculate” provides a detailed projection of the financial metrics necessary to achieve your specified goals. Here’s how to interpret the data in each column of the table:

  1. Metric Name
  2. Current: This column shows the current value of each financial metric listed.
  3. Required Future: These values indicate what each metric needs to reach in the future, based on your input assumptions, to achieve the desired annual return rate. For example, the price of the stock must increase to a specified amount, the market cap must grow significantly, etc.
  4. Explanation: This column provides a textual explanation of what needs to happen for the metrics in column 5 to be achieved. For instance, it explains the revenue required for the future P/S to reach your selected value or the change in the price based on that ratio.

Compare 5 Dates

Here’s how to use and interpret the part of the tool shown in the image:

  1. Select Dates for Analysis: In the row labeled with the date input boxes, enter up to five different dates that you want to analyze. These should be dates on which you are interested in examining the financial metrics and risk ratings of the company.
  2. Calculate Data: Click the “Calculate” button to generate the financial data and ratings for the dates you have selected.
  3. Review ERS’s Proprietary Risk Ratings: At the top section of each column for each date, you will find three of ERS’s proprietary risk ratings. These ratings help assess the risk level associated with the company’s stock on each selected date:
    • Price Risk Indicator™ (PRI™): A measure and rating of the statistical probability and magnitude of a stock’s future price changes.
    • Equity Risk Indicator™ (ERI™): A ratings of both the financial condition and valuation of a stock.
    • Fiduciary Risk Rating™ (FRR™): A robust and trustworthy statistical rating system that alerts fiduciaries to the substantial risks of loss in a company’s stock, regardless of its market popularity.
  4. Analyze Financial Metrics: Below the risk ratings, a selection of financial metrics for the company on each date is displayed. These metrics provide a snapshot of the company’s financial health and performance at each point in time.
  5. Understand Investment Outcomes: The bottom rows show the greatest potential gain or loss an investor could have experienced if they had bought the stock on the respective dates. It also highlights the risk of substantial losses, particularly if any of the risk ratings exceed 50, serving as a caution against investing in stocks with high-risk assessments.
  6. Historical Ratings Analysis: By clicking the “Get Historic Ratings” button, you can access a retrospective view of the dates when this stock’s risk ratings were at their best or worst. This allows investors to understand better the historical volatility and risk profile of the stock over time.

This tool is designed to provide a comprehensive analysis of the financial and risk aspects of a company over selected historical dates, assisting investors in making more informed decisions based on past performance and proprietary risk assessments.