Investment Grade Analysis On These Shares: Toho Holdings Co., Ltd. (TSE:8129), Kitron ASA (OB:KIT)

Here will take a quick scan of Earnings Yield information on shares of Toho Holdings Co., Ltd. (TSE:8129). Currently, the Earnings to Price (Yield) is 0.072194, Earnings Yield is 0.077409, and Earnings Yield 5 year average is 0.048294. Earnings yield provides a way for investors to help measure returns. Investors may choose to compare the earnings yield of stocks to money market instruments, treasuries, or bonds. The firm will look to it’s next scheduled report date to try to improve on these numbers.

Investors are typically searching far and wide for any little advantage they can get in the stock market. Short-term traders using technical analysis may be looking to score quick profits by capitalizing on the fluctuations of stock prices. There are many different technical indicators that traders can choose to study. Some traders may find an indicator that works great by itself. Others may use a combination of multiple indicators to help spot trends and patterns. Many active traders will keep a close eye on a particular stock when it is nearing a new high or new low that hasn’t been touched in some time. Studying historical stock price action may lend some insight into whether or not a stock is likely to break out past the new high, or plummet further to a much lower low. Staying on top of the action may be crucial when frequently entering and exiting trades.

Checking in on some valuation rankings, Toho Holdings Co., Ltd. (TSE:8129) has a Value Composite score of 15. 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 12.

FCF

Turning to Free Cash Flow Growth (FCF Growth) is the free cash flow of the current year minus the free cash flow from the previous year, divided by last year’s free cash flow.  The FCF Growth of Toho Holdings Co., Ltd. (TSE:8129) is .  Free cash flow (FCF) is the cash produced by the company minus capital expenditure.  This cash is what a company uses to meet its financial obligations, such as making payments on debt or to pay out dividends.  The Free Cash Flow Score (FCF Score) is a helpful tool in calculating the free cash flow growth with free cash flow stability – this gives investors the overall quality of the free cash flow.  The FCF Score of Toho Holdings Co., Ltd. (TSE:8129) is .  Experts say the higher the value, the better, as it means that the free cash flow is high, or the variability of free cash flow is low or both.

Watching some historical volatility numbers on shares of Toho Holdings Co., Ltd. (TSE:8129), we can see that the 12 month volatility is presently 16.9648. The 6 month volatility is 18.6875, and the 3 month is spotted at 18.6242. 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.  Heading into earnings season investors often take close note of the volatility levels ahead of and immediately after the earnings report. 

Price Index

The Price Index is a ratio that indicates the return of a share price over a past period. The price index of Toho Holdings Co., Ltd. (TSE:8129) for last month was 1.02512. This is calculated by taking the current share price and dividing by the share price one month ago. If the ratio is greater than 1, then that means there has been an increase in price over the month. If the ratio is less than 1, then we can determine that there has been a decrease in price. Similarly, investors look up the share price over 12 month periods. The Price Index 12m for Toho Holdings Co., Ltd. (TSE:8129) is 1.38483.
Price Range 52 Weeks

Some of the best financial predictions are formed by using a variety of financial tools. The Price Range 52 Weeks is one of the tools that investors use to determine the lowest and highest price at which a stock has traded in the previous 52 weeks. The Price Range of Toho Holdings Co., Ltd. (TSE:8129) over the past 52 weeks is 0.961. The 52-week range can be found in the stock’s quote summary.

Quant Data
Shifting gears, we can see that Toho Holdings Co., Ltd. (TSE:8129) has a Q.i. Value of 28. The Q.i. Value ranks companies using four ratios. These ratios consist of EBITDA Yield, FCF Yield, Liquidity, and Earnings Yield. The purpose of the Q.i. Value is to help identify companies that are the most undervalued. Typically, the lower the value, the more undervalued the company tends to be.

Another signal that many company execs and investors don’t want to talk about is the C-Score. The C-Score is a system developed by James Montier that helps determine whether a company is involved in inflating 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 Toho Holdings Co., Ltd. (TSE:8129) is -1.  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 unusual activity. The C-Score assists investors in assessing the validity of financials. 

F-Score

At the time of writing, Toho Holdings Co., Ltd. (TSE:8129) has a Piotroski F-Score of 6. 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.

Smart investors are often very knowledgeable about the markets. Many successful investors have become highly adept at knowing when to buy and when to sell. They have also managed to control risk and secure sustained profits. This doesn’t just happen overnight. Investors often spend many years of trial and error before being able to put together the puzzle. Top investors are also able to make better investing decisions with the information at hand. With vast amounts of data readily available for everyone, it becomes more about interpreting the data rather than just receiving it. Knowing how to block out the noise and find information that is useful, can be a highly coveted skill. Turning available information into a winning portfolio is where the good investor can become a great investor.

Earnings Yield is calculated by taking the operating income or earnings before interest and taxes (EBIT) and dividing it by the Enterprise Value of the company.  The Earnings Yield for Kitron ASA (OB:KIT) stands at 0.077381.  Earnings Yield helps investors measure the return on investment for a given company.  Similarly, the Earnings Yield Five Year Average is the five year average operating income or EBIT divided by the current enterprise value.  The Earnings Yield Five Year average for Kitron ASA (OB:KIT) is 0.026458.  Further, the Earnings to Price yield of Kitron ASA OB:KIT is 0.063481.  This is calculated by taking the earnings per share and dividing it by the last closing share price.  This is one of the most popular methods investors use to evaluate a company’s financial performance.

Investors might be taking a closer look at the portfolio after recent market action. Some financial insiders may be ready to usher in the bears and projecting the end of the bull run. While this may or may not be the case, investors need to be ready for any scenario. The time may have come to cash out some winners and cut the losers. A portfolio rebalance may be necessary in order to secure profits as we head into the latter half of the year. Keeping a diversified portfolio may entail adding some different sectors and even venturing into foreign markets. Investors will be tracking company earnings as we roll into the next round of reports. It may be a bit easier to make sense of future stock market prospects after seeing how many companies hit or miss their marks.

Quant Signals – Value Composite, C- Score, MF Rank, M-Score, ERP5

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of Kitron ASA (OB:KIT) is 27.  A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company.  The VC1 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, and price to earnings.  Similarly, the Value Composite Two (VC2) is calculated with the same ratios, but adds the Shareholder Yield.  The Value Composite Two of Kitron ASA (OB:KIT) is 20.

Kitron ASA (OB:KIT) currently has a Montier C-score of 2. This indicator was developed by James Montier in an attempt to identify firms that were altering financial numbers in order to appear better on paper. The score ranges from zero to six where a 0 would indicate no evidence of book cooking, and a 6 would indicate a high likelihood of something amiss. A C-score of -1 would indicate that there is not enough information available to calculate the score. Montier used six inputs in the calculation. These inputs included a growing difference between net income and cash flow from operations, increasing receivable days, growing day’s sales of inventory, increasing other current assets, decrease in depreciation relative to gross property plant and equipment, and high total asset growth.  

The MF Rank (aka the Magic Formula) is a formula that pinpoints a valuable company trading at a good price.  The formula is calculated by looking at companies that have a high earnings yield as well as a high return on invested capital.  The MF Rank of Kitron ASA (OB:KIT) is 2999.  A company with a low rank is considered a good company to invest in.  The Magic Formula was introduced in a book written by Joel Greenblatt, entitled, “The Little Book that Beats the Market”.

Kitron ASA (OB:KIT) has an M-score Beneish of -2.254792. This M-score model was developed by Messod Beneish in order to detect manipulation of financial statements. The score uses a combination of eight different variables. The specifics of the variables and formula can be found in the Beneish paper “The Detection of Earnings Manipulation”.

The last signal we’ll look at is the ERP5 Rank.  The ERP5 Rank is an investment tool that analysts use to discover undervalued companies.  The ERP5 looks at the Price to Book ratio, Earnings Yield, ROIC and 5 year average ROIC.  The ERP5 of Kitron ASA (OB:KIT) is 4880.  The lower the ERP5 rank, the more undervalued a company is thought to be.

Volatility/PI

Stock volatility is a percentage that indicates whether a stock is a desirable purchase.  Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year.  The Volatility 12m of Kitron ASA (OB:KIT) is 29.1869.  This is calculated by taking weekly log normal returns and standard deviation of the share price over one year annualized.  The lower the number, a company is thought to have low volatility.  The Volatility 3m is a similar percentage determined by the daily log normal returns and standard deviation of the share price over 3 months.  The Volatility 3m of Kitron ASA (OB:KIT) is 29.5009.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 30.2488.

We can now take a quick look at some historical stock price index data. Kitron ASA (OB:KIT) presently has a 10 month price index of 1.35255. 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 1.25342, the 24 month is 1.89725, and the 36 month is 3.98113. Narrowing in a bit closer, the 5 month price index is 1.00952, the 3 month is 0.99168, and the 1 month is currently 0.93713.

ROIC

The Return on Invested Capital (aka ROIC) for Kitron ASA (OB:KIT) is 0.236368.  The Return on Invested Capital is a ratio that determines whether a company is profitable or not.  It tells investors how well a company is turning their capital into profits.  The ROIC is calculated by dividing the net operating profit (or EBIT) by the employed capital.  The employed capital is calculated by subrating current liabilities from total assets.  Similarly, the Return on Invested Capital Quality ratio is a tool in evaluating the quality of a company’s ROIC over the course of five years.  The ROIC Quality of Kitron ASA (OB:KIT) is 3.902612.  This is calculated by dividing the five year average ROIC by the Standard Deviation of the 5 year ROIC.  The ROIC 5 year average is calculated using the five year average EBIT, five year average (net working capital and net fixed assets).  The ROIC 5 year average of Kitron ASA (OB:KIT) is 0.111965.

Investing in the stock market can be highly unpredictable. Veteran investors may have spent many years studying the market. At some point along the way, many investors may have had to make some tough decisions. Making the tough stock portfolio decisions can seem like a daunting task, especially if some wrong calls have been made in the past. Investors who are able to quickly learn from previous mistakes may be much better situated if they are able to keep from repeating those mistakes. When just starting out, investors may want to go slow and steady in order to focus on the simpler investing ideas first.