Staegr

Staegr is a trademarked measure of the stability of historical earnings and sales used by subscribers to financial data and brokerage firms such as Morningstar and Commonwealth Securities. The reason to use Staegr is because research shows that high stability stocks lead to forecasts that are more accurate. It was developed by John Price.
Definition
Stability of Earnings Growth, or Staegr (pronounced stay-ger), is a measure of the stability of the growth of earnings or sales from year to year expressed as a percentage. The maximum figure of 100 percent represents earnings that rise or fall by the same percentage each year. A low figure means the company's earnings are more volatile and vary significantly on an annual basis.
The calculation of Staegr is based upon fitting an exponential curve to historical data with more emphasis placed on recent data. It can also include the next two or three years of consensus forecast earnings. Special adjustments are made for negative earnings, for extreme outliers and for earnings near zero.
Research
Major investors such as Peter Lynch and Warren Buffett emphasize the importance of being able to forecast the future growth of earnings of companies. Unfortunately, extensive research by David Dreman and others shows that analyst forecasts are highly unreliable. For instance, Dreman showed that only about 50 percent of forecasts over the period three months or less were accurate to plus or minus 10 percent.

Main Menu

See Also

Main Menu