NOVEMBER 2002

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Toolkit's Undocumented Features

Stock Analysis Tools

by Jim Thomas

Toolkit has a number of "undocumented features" that some NAIC investors find useful during their stock studies. Some of the more useful of these are described below. These "undocumented features" are presented here for information only. Some of them do not conform to official NAIC guidelines and they are subject to change at any time.

If you find that some of them don't work for you, make sure you have the most recent version of Toolkit 4 (when this feature was written, version 4.0.15 was the most recent).

Opening a Company from the Stock Library

To access the Stock Library, click on the vertical green tab. The Stock Library section appears at the top and the Portfolios section appears at the bottom.

In the Stock Library section you can double click on a company to open it. (You can also click once on a company to select it and then click on the Open button.)

In the Portfolios section you can double right-click on a company to open it.

A double left-click on a company in the Portfolios section allows you to change the number of shares held in that portfolio.

Keyboard Shortcuts to change the Stock Price Date

There are several keyboard shortcuts that can be used in the Basic Data window to change the stock price date (outlined in red below).

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Insert today's date: Home Key.

Change the month: Page Up/Page Down Keys.

Change the day: Arrow Up/Down Keys.

Preferred Procedure Summary

On the front side of the SSG, pressing Alt-R will show a summary of the preferred procedure calculations at the lower left of the SSG growth chart (outlined below in red). The summary is included when the SSG is printed.

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Align SSG Chart Data with the Vertical Scale

Data points on the SSG growth chart are not always aligned with the numbers on the vertical scale at the left. (You may be able to see this with the Sales data in the figure above.) Because of that, trying to identify the value of a data point by reading across to the scale at the left doesn't always work. Since you are mainly evaluating trends on that chart, this lack of alignment isn't usually a problem.

Nevertheless, it can sometimes be useful to have the data points aligned with the scale. To do this, click on the SSG chart to get to the Visual Analysis window (below).

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You can use the four slider bars at the right of that window to move the data (Sales, Pre-Tax Profit, Earnings, Price) up and down on the chart. By holding down the Ctrl key while clicking on the slider bars you can move the data to a position where it aligns with the vertical scale. By clicking at various places on the slider bars you can still move the data to different positions (but only those that align with the vertical scale).

Show "R-squared" Values for Sales and EPS Trends

Toolkit can show you R-squared values for the earnings and sales trends shown on the SSG growth chart. An R-squared value (which is always between 0 and 1) can be interpreted as a measure of how consistent a trend has been over time. When interpreted in this way, values very close to 1 are considered to indicate a consistent trend.

To see these R-squared values, click on the SSG chart to get to the Visual Analysis window (above). Then click on the Hist. Growth button (or press Alt-G) to get to the Historical Growth Rate Change Graph (below) and press Alt-R.

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These R-squared values do not consider any outliers in the sales or earnings data (i.e., they always take into account all the historical data). Note that the R-squared values are for the trends shown on the SSG growth chart, not the trends shown on the Historical Growth Rate Change Graph.

Compute ROE using Beginning Book Value

In SSG section 2B, the % Earned on Equity calculation (Return on Equity) divides end of year earnings by end of year book value. Some people prefer to use start of year book value in this calculation. You can read Ellis Traub's thoughts about this in his article Using ROE to Analyze Stocks.

The section 2B ROE calculation can be changed to use start of year book value by pressing Alt-R on the back side of the SSG. "NMF" (outlined in red below) is shown in the box for the earliest year to indicate that no value is available for this year (because that start of year book value isn't available in Toolkit).

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Show 10 Years of P/E History

In SSG section 3, five years of P/E history are shown. At times it can be useful to see a longer P/E history. You can see 10 years of P/E history as follows. In SSG section 4A and 4B, there are green boxes outlining the Avg. High and Low P/E values.

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Clicking in either one of those green boxes takes you to the "Judgment - Average High/Low P/E" window.

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Pressing Alt-X in that window takes you to the "Estimate Average PEs" window where you can see 10 years of P/E history.

As shown above, you can mark outliers and compute a new average by clicking on individual values. To use the average shown here in SSG section 4, click the "Use" button. The outliers selected here are only temporary and are not saved outside this window.

Calculate Potential Buy Price

The highest price that satisfies both the SSG risk criteria (3-to-1 up-side down-side ratio) and the SSG reward criteria (15% total return) can be shown by pressing Alt-B. (This works on either the front or back of the SSG.)

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Calculate Total Return Over 5 Years

On the paper SSG form, total return is always calculated over exactly 5 years (see the calculations in SSG section 5C). In Toolkit, total return is (almost) always calculated over less than 5 years.

The total return period in Toolkit starts on the date of the current price and ends 5 years after the end of the most recent full fiscal year. That period will be five years only if the date of the current price is the day after the end of the most recent fiscal year.

To see the length of the total return period used by Toolkit, press Alt-N and look in the lower right corner on the back side of the SSG.

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To use a 5 year period for total return in Toolkit, look in the lower right corner on the back side of the SSG and press Ctrl-Alt-T. The P.A.R. and Tot. Ret. values will change (generally, they will get smaller).

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Using Ctrl-Alt-T may also affect other sections on the SSG. In section 1, Sales and EPS growth will always be projected for 5 full years and this EPS projection will be carried over to the back of the SSG.

Often, the projections in section 1 will already be for five years and will not change. These projections will be for less than five years (without Ctrl-Alt-T) only if the most recent quarter is not for the 4th quarter of the company's fiscal year and Toolkit has been told to start the growth projections from the most recent quarter.

If the normal projection in section 1 is for less than five years, the full five year projection is shown visually by shifting the growth projection lines horizontally to the left so they begin at the end of the most recent full fiscal year.

Use Your Own Judgment

Don't use Toolkit's "undocumented features" blindly. They do not all conform to official NAIC recommendations. Its always good advice to "use your own judgment" on the SSG and that's perhaps doubly true here.

Jim Thomas is an individual investor and member from Seattle, Washington. One of his hobbies is developing Excel spreadsheet-based tools to facilitate his stock studies.