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South32 Limited (ASX:S32) VC Score Reaches 14

admin 5 years ago 4

Checking in on some valuation rankings, South32 Limited (ASX:S32) has a Value Composite score of 14. Developed by James O’Shaughnessy, the VC score uses five valuation ratios. These ratios are price to earnings, price to cash flow, EBITDA to EV, price to book value, and price to sales. The VC is displayed as a number between 1 and 100. In general, a company with a score closer to 0 would be seen as undervalued, and a score closer to 100 would indicate an overvalued company. Adding a sixth ratio, shareholder yield, we can view the Value Composite 2 score which is currently sitting at 8. 

Investors are often trying to figure out the best way to analyze the stock market. When it comes to stock research, investors may use fundamental analysis, technical analysis, or a combination of both. Boiling down the two techniques, studying the fundamentals puts the focus on factors that may influence specific stocks, and studying the technicals puts the focus on market behavior analysis. Investors who study the fundamentals are typically trying to understand why stocks and markets move the way they do. Technical analysts are more concerned with spotting trends and trying to measure the characteristics of those trends. Some investors may prefer one method of stock research over another, but many investors may use a combination of both methods to help make sure that all the bases are covered.

In taking a look at some other notable technicals, South32 Limited (ASX:S32)’s ROIC is 0.106401. The ROIC 5 year average is 0.058097 and the ROIC Quality ratio is 2.085494. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits.

We also note that South32 Limited (ASX:S32) has a Shareholder Yield of 0.082901 and a Shareholder Yield (Mebane Faber) of 0.08998. The first value is calculated by adding the dividend yield to the percentage of repurchased shares. The second value adds in the net debt repaid yield to the calculation. Shareholder yield has the ability to show how much money the firm is giving back to shareholders via a few different avenues. Companies may issue new shares and buy back their own shares. This may occur at the same time. Investors may also use shareholder yield to gauge a baseline rate of return.

South32 Limited (ASX:S32) has a current MF Rank of 4005. Developed by hedge fund manager Joel Greenblatt, the intention of the formula is to spot high quality companies that are trading at an attractive price. The formula uses ROIC and earnings yield ratios to find quality, undervalued stocks. In general, companies with the lowest combined rank may be the higher quality picks.

We can now take a quick look at some historical stock price index data. South32 Limited (ASX:S32) presently has a 10 month price index of 1.00068. The price index is calculated by dividing the current share price by the share price ten months ago. A ratio over one indicates an increase in share price over the period. A ratio lower than one shows that the price has decreased over that time period. Looking at some alternate time periods, the 12 month price index is 0.98170, the 24 month is 1.40584, and the 36 month is 2.37330. Narrowing in a bit closer, the 5 month price index is 1.05549, the 3 month is 0.90897, and the 1 month is currently 1.00880.

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Trying to extract profits from the stock market is not the easiest of tasks. In fact, it can be quite difficult. Amateur traders may be faced with tough challenges right out of the gate. Some traders may experience some crushing blows, and they have to figure out early on how to steady the ship. Completing all the necessary research can help the trader build a solid foundation, but when the rubber hits the road, it may take more than that just to stay afloat. Developing the proper mindset can be one of the biggest contributing factors for success in trading the stock market. This may take some time to achieve, but it may make all the difference when attempting to reach the goal of long lasting success.

The C-Score is a system developed by James Montier that helps determine whether a company is involved in falsifying their financial statements.  The C-Score is calculated by a variety of items, including a growing difference in net income verse cash flow, increasing days outstanding, growing days sales of inventory, increasing assets to sales, declines in depreciation, and high total asset growth.  The C-Score of South32 Limited (ASX:S32) is 2.00000.  The score ranges on a scale of -1 to 6.  If the score is -1, then there is not enough information to determine the C-Score.  If the number is at zero (0) then there is no evidence of fraudulent book cooking, whereas a number of 6 indicates a high likelihood of fraudulent activity. The C-Score assists investors in assessing the likelihood of a company cheating in the books.

Volatility

Watching some historical volatility numbers on shares of South32 Limited (ASX:S32), we can see that the 12 month volatility is presently 30.971700. The 6 month volatility is 27.257300, and the 3 month is spotted at 20.994400. Following volatility data can help measure how much the stock price has fluctuated over the specified time period. Although past volatility action may help project future stock volatility, it may also be vastly different when taking into account other factors that may be driving price action during the measured time period. 

Piotroski F-Score

At the time of writing, South32 Limited (ASX:S32) has a Piotroski F-Score of 8. The F-Score may help discover companies with strengthening balance sheets. The score may also be used to spot the weak performers. Joseph Piotroski developed the F-Score which employs nine different variables based on the company financial statement. A single point is assigned to each test that a stock passes. Typically, a stock scoring an 8 or 9 would be seen as strong. On the other end, a stock with a score from 0-2 would be viewed as weak.

Most experienced traders understand how unpredictable the market can be. The market is its own kind of beast that does not care whether the trader makes money or not. Because there are so many different possible trading strategies to use, it can be extremely tough to find one that works. There may be times when traders become overwhelmed with the craziness of daily market action. Wandering through turbulent market climates may require increased discipline and patience. It can be highly tempting for traders to jump into a position based on can’t miss stock tips. Having the patience to make quality, informed trades, may end up helping the trader immensely.

P/B

South32 Limited (ASX:S32) has a Price to Book ratio of 1.098908. This ratio is calculated by dividing the current share price by the book value per share. Investors may use Price to Book to display how the market portrays the value of a stock. Checking in on some other ratios, the company has a Price to Cash Flow ratio of 4.902963, and a current Price to Earnings ratio of 8.352941. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.

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