New user here working with the stock screener. I like to look at EV/Free Cash Flow and created my first screen with this. I know the general number of this ratio for a fair number of stocks-IBM being one of them. When IBM didn’t make my screen criteria when I knew it should, I got suspicious and simply had the screener list a FCF (TTM) and noticed a pretty big discrepancy with what Morningstar reports for FCF. I also played around with previous year/quarter FCF and saw the result didn’t match between M* and P123. I also looked at EBITDA and saw P123 didn’t match with M* also, however, sales revenues matches perfectly.
Is there something obvious that I’m missing here, or is this “normal”?
Hi, welcome aboard.
From my own experience in the couple of years I have used P123, you are going to find some discrepancies in data for not only fundamentals but also analyst earnings expectations, etc. So yes, this is normal.
As a starting point to learn why, see the paper on this site under Help-> Library->About Our Data. See ‘Why Compustat’.
All data is not reported and used the same way.
Then start doing google searches on Portfolio123 plus whatever you are looking at (like EV). You’ll see there are different ways to calculate it and assumptions made. I don’t know why MS’s FCF data varies from P123’s. But look at it very carefully when making comparisions. It could be Compustat versus Thomson data, a variance in time frames, etc.
Also, I would go to the SEC data for IBM and look at what they reported. I would not use P123 or MS as the source but start with the company. I have done that when questioning data and P123 usually comes out fine.
There is a company in beta called silqe.com that makes quick work of retrieving SEC-filed financials. Eventually you will be able to create templates and your own ratios that you can download into Excel.
Thanks guys, that helps. I downloaded the Excel sheet and discovered that P123 subtracts CapEx and Dividends paid from operating cash flow to get the FCF value. M* (and most other places I’ve checked) are FCF=OCF-CapEx with no consideration for the dividend. The dividend component was what was tripping me up. I backchecked the values P123 was giving me for all the terms and everything checks out.
As I expected it was a PICNIC-Problem In Chair Not In Computer
Whether or not an item you see in one place (P123, Morningstar, MSN, AAII, Google Finance, etc.) matches only tells you whether they use the same data vendor. And among sites accessible to individual investors, you will rarely see us match anybody since we use Compustat, a high-end database designed specifically for the kind of work we do, which involves modeling that compares many companies to one another. Most other sites, including Morningstar, use databases designed for reference. the white paper to which David referred that explains all this can be accessed via this link: http://www.portfolio123.com/doc/WhyCompustat.pdf
I suggest reading that paper if you’re interested in the details of the data we use. The differences among databases can at times be considerable, and it’s also important to understand why we very often do not want to match what you see in 10-K and 10-Q reports. (Without “standardization” of data, neither we nor any similar platform could function.)