Preferred Equity is the net number of preferred shares multiplied by the par or stated value per share as presented in the company's balance sheet.
There are several things worth considering before using this in a model:
First, as a practical matter for a company preferred equity functions more as debt without an expiration date than it does like common equity. The line is further muddied by the presence of convertible options attached to many preferred shares. The requirement to pay preferred dividends is almost as serious as it is to repay debt.
Second, because of its similarity in practical effect to other obligations like accounts payable and debt, this line should probably be removed from total equity when using shareholders equity. In fact, in order to avoid this and other adjustments (particularly non-redeemable non-controlling interest) we advise that users consider simply using common equity in lieu of shareholders equity.
Source and Availability
The data points come from SEC filings or earnings announcements of a company (click here for the line-item reference spreadsheet). Since the data is "standardized" by the data provider the exact number may not exist in the original source. The data is usually a single line-item (see the link at the end for an excel spreadsheet with details). There are two access methods: prebuilt factors and using a function syntax.
When using the function syntax you specify the historical period using parameters in parenthesis as follows:
function(offset,type[,NAHandling])
offset: 0-20 (for interim) 0-10 (for annual)
type: QTR (for interim), ANN (for annual), TTM (for trailing twelve months)
NAHandling: [FALLBACK],KEEPNA,ZERONA
For types QTR & ANN the value is taken straight out of the filing with the corresponding offset, ex: 0 is most recent, 1 is previous, etc. TTM types are computed in two ways: for income and cash flow statement values are calculated by adding four quarterly values. For balance sheet items, TTM is the average of the trailing four quarters.
The NAHandling parameter is optional and is used to control what happens in preliminary reports where many items could be missing. Preliminary reports are press releases by the company and only affect the most recent ("0") offset period. They can last several weeks and can cause false signals due to incomplete data (see "CompleteStmt" for a way to identify companies with preliminary data).
Three options are available when an NA is found in a preliminary report:
| FALLBACK | this is the default. When an NA is encountered the value is pulled from the offset "1" period. |
| KEEPNA | do nothing. NAs will be preserved, which can cause the entire expression to fail. |
| ZERONA | NAs are converted to 0 |
Pre-built factors are available for convenience and correspond to the following formula syntax:
| Period | Description | Corresponding Parameters |
| Q | Recent Quarter | (0, QTR) |
| PQ | Prior Quarter | (1, QTR) |
| PYQ | Prior Year quarter | (4, QTR) |
| TTM | Trailing Twelve Months | (0, TTM) |
| PTM | Prior Trailing Twelve Months | (4, TTM) |
| A | Recent Annual | (0, ANN) |
| PY | Prior Year | (1, ANN) |
| Gr%PQ | Growth % PQ | (0, QTR) / (1, QTR) |
| Gr%PYQ | Growth % PYQ | (0, QTR) / (4, QTR) |
| Gr%TTM | Growth % TTM | (0, TTM) / (4, TTM) |
| Gr%PQTTM | Growth % TTM 1Q Ago | (0, TTM) / (1, TTM) |
| Gr%A | Growth % Annual | (0, ANN) / (1, ANN) |
| Gr%3Y | Growth % 3 year | (0, ANN) / (3, ANN) annualized |
| Gr%5Y | Growth % 5 year | (0, ANN) / (5, ANN) annualized |
| Gr%10Y | Growth % 10 year | (0, ANN) / (10, ANN) annualized |
| RSD%ANN | RSD % 10Y of annuals |
LoopRelStdDev |
| RSD%TTM | RSD % 5Y of TTM | LoopRelStdDev ("function(CTR*2,TTM)",10,0,1,1)) |
| RegEstTTM | Regression Est 5Y | Eval(LinReg("function(CTR * 2, TTM)", 10) , EstimateY(0), NA) |
| RegGr%TTM | Regression Gr% 5Y | Eval(LinReg("function(CTR * 2, TTM)", 10) ,RegGr%(2), NA) |
| RegEstANN | Regression Est 10Y | Eval(LinReg("function(CTR, ANN)", 10) , EstimateY(0), NA) |
| RegGr%ANN | Regression Gr% 10Y | Eval(LinReg("function(CTR, ANN)", 10) ,RegGr%(1), NA) |
| %SalesQ | % of Q Sales | function(0, QTR) / Sales(0, QRT) |
| %SalesA | % of A Sales | function(0, ANN) / Sales(0, ANN) |
| %AssetQ | % of Q Assets | function(0, QTR) / AstTot(0, QRT) |
| %AssetA | % of A Assets | function(0, ANN) / AstTot(0, ANN) |
| PSQ | Per Share Q | function(0, QTR) / Shares(0, QRT) |
| PSA | Per Share A | function(0, ANN) / Shares(0, ANN) |
| 5YAvg | 5 Year Average | LoopSum("function(CTR, ANN)", 5) / 5 |
NOTE: PTM offset is 4 , not 1, since it uses interim periods
Click Here for the Line-Item Reference Spreadsheet.