An acquaintance, with whom I have occasionally swapped views on investments, cornered me today and gave a vigorous endorsement of Mylan N.V. (NSQ:MYL).

We don’t normally agree on much about investing: he’s too willing to believe, I’m too cynical. However, he is in pharmaceutical sales so I thought it was worth a look.

For the past few years I have used a very simple screen before investing any real time or effort in a stock. It is this: how do the Reported Earnings per Share compare to the Normalised Earnings per Share?

A quick review of Mylan, using Stockopedia data showed over 7 reporting periods (6.5 years), total Reported Earnings per Share of $8.97 and total Normalised Earnings per Share of $16.29 – far enough adrift in the wrong direction to end my feeble interest. To benchmark my cynicism I did the same exercise with a large cap American pharmaceutical I am invested in, Celgene (NSQ:CELG). The result: total Reported Earnings per Share $27.18; total Normalised Earnings per Share $26.85. I know why I am invested in Celgene and will not be investing in Mylan.

I read a report today of Kier (Lon: KIE) being in serious financial trouble. As an academic exercise I ran my screen: total Reported Losses per Share, 25.4p – total Normalised Earnings per share 482.9p. Reality verses make believe and reality must always win in the end.

I also ran the screen over what is currently my largest holding and a couple of other shares that have had a lot of publicity on Stockopedia over the past months – see below for the results:

StockReported Earnings/(Losses) per Share
Normalised Earnings/(Losses) per Share
French Connection          (29.51p)
Revolution Bars Group          11.05p
Apollo Global Management         $12.99

It is not definitive and is only backward looking but I have found it has saved a lot of time and for me, sorts the sheep and the goats.

Stay safe out there.


Unlock the rest of this Article in 15 seconds

or Unlock with your email

Already have an account?
Login here