Post has shared content
Insights from on old pro.
If you can't be bothered to read his memo on liquidity, at least watch this.

Post has attachment
The name Howard Marks is not as widely known to investors as Warren Buffet or Benjamin Graham, but he is a man with a significant following among value investors. Even Buffet himself recognises Marks as someone he learns from.

This week he sent out his latest memo, in which he recalls an observation about investing made to him by Buffet’s business partner Charlie Munger: “It’s not supposed to be easy,” Munger told him. “Anyone who finds it easy is stupid.”

Post has attachment
I want to focus on the bit in the book [Misbehaving, The Making of Behavioural Economics]  in which Prof Thaler [president of the American Economic Association] writes about value investing — a subject I discussed with him when we met for an interview this week. There are hordes of studies that show that over most reasonable periods investing in cheap stocks is a better idea than investing in expensive stocks.

The original investment guru Benjamin Graham told us this was so back in The Intelligent Investor in 1949. Some stocks, he said, traded below their intrinsic value thanks to “neglect or prejudice”. They might continue to do so for an “inconveniently long time”, but those with a longish timeframe could and should just buy these cheap stocks with a low price/earnings (P/E) ratio and wait. His studies showed that this worked perfectly well. From 1937 to 1969, $10,000 invested in the expensive stocks in the Dow Jones would have ended up worth $25,300. But $10,000 in the cheap stocks would have risen to $66,900.


http://www.ft.com/cms/s/0/f3a83726-52f9-11e5-8642-453585f2cfcd.html#ixzz3ksg0NKT4

Post has shared content
Words of wisdom directly from the father of Value Investing.

A Value Investor's Analysis of Automatic Data Processing (updated 1 June 2015)

I've analyzed ADP's financial statements to see how well the company measures up to a set of criteria familiar to value investors. The approach used is based on, with some adjustments and extensions, recommendations made by the legendary investor Benjamin Graham in his book, "The Intelligent Investor," which was first published in 1949. One extension, is that a single numerical score is calculated to summarize the criteria comparisons, and another that free cash flow is considered when assessing fair value.

ADP is a major provider of payroll and other business services. A unit serving the automotive industry was spun off last year, and the new company became CDK Global. ADP earned $1 billion on revenue of $11 billion during the last year. With the company's shares now trading for about $85 each, ADP has a market value of $40 billion. It is, therefore, classified as a Large-Cap stock.

In the quarter that ended on 31 March 2015, ADP earned $1.04 per share (excluding certain items), which beat the $1.02 Wall Street consensus forecast. See https://goo.gl/8IChQF for a more detailed review, with many charts, of how ADP performed during the quarter.

The analysis described here produces a set of GREEN, YELLOW, or RED grades and an Overall Score between zero and 100. The "Fairly Valued" criterion is considered more important than the others, and it is given extra weight when the Overall Score is calculated. A company attaining an Overall Score of 60 or more points qualifies for my list of suitable candidates for value investors. Companies on a rapid growth trajectory, with a lofty share price and elevated risk profie, can be appealing but they will generally fail the value tests here.

ADP's Overall Score is 51 of the 100 possible points, which is a decent, but not quite good enough result for this exercise. The score is below the 60-point cutoff, and ADP, therefore, does not presently qualify for inclusion on my list of suitable value investments.

Check back here occasionally to see if the Overall Score has been recalculated to reflect new financial data or a significant change in company's share price.  The score typically moves in the opposite direction of the share price (i.e., less expensive shares, relative to company fundamentals, are preferred).

ADP's grades on each of the seven Investment Suitability criteria are listed below, along with some of the factors that determine the grade.

1. The company's Size is substantial: GREEN
    Market Value: $40.4 billion (large cap)

2. The company is Conservatively Financed: GREEN
    Current ratio = 1.7 (>2.0 is conservative)
    Long-term debt/Working Capital = 1% (<150% is conservative)

3. The company produces Stable Earnings: GREEN
    Zero 4-quarter losses in the last five years (perfect)
    Earnings volatility = 3% (negligible)

4. The company achieves Growth in earnings & cash flow: YELLOW
    EPS growth rate (trailing year) = -2% (poor)
    EPS growth rate (five-year average) = 4% (weak)
    FCF growth rate (trailing year) = 16% (good)
    FCF growth rate (five-year average) = 3% (weak)

5. The company is Efficiently Profitable: GREEN
    Cash Flow ROIC = 35% (excellent)

6. The company pays a Healthy Dividend: GREEN
    Dividends paid for the last five years or longer
    Dividend 5-year average growth rate = 9% (fair)
    Dividend = 47% of last year's FCF (sustainable)

7. The company's shares are Fairly Valued: RED
    Price/Earnings (last year) = 28.8 (high)
    Price/Earnings (five-year average) = 19.8 (moderate to pricy)
    Free Cash Flow/Market Value = 4.6% (modest)
    Price/Book Value = 7.8 (more expensive than the five-year average of 4.5)
    Price/Sales = 3.6 (more expensive than the five-year average of 2.6)


In summary, Automatic Data Processing achieves five GREEN grades, one YELLOW grade, one RED grade on the seven investment suitability criteria.  The grade on the especially important Fairly Valued criterion is RED, which is a concern. The Overall Score is 51 of the 100 possible points, and because it's below the 60-point threshold, ADP does not presently qualify for my list of suitable holdings for cautious value investors.

This post reports on the application of a particular quantitative methodology to evaluate companies.  The evaluation is not a complete analysis of every material fact about the subject company, its finances, or value. The methodology relies on financial data believed, but not guaranteed, to be accurate. Other analytical techniques will be more applicable for investors having different goals, circumstances, and tolerance for investment risk. The analysis should not be considered investment advice, nor does it constitute an offer or solicitation to buy or sell any security. The author might have a position in the companies mentioned. The methodology and results are subject to change without notification.

---------------
EPS = Earnings Per Share
FCF = Free Cash Flow
ROIC = Return on Invested Capital


#adp           #valueinvesting       #nac_financialanalysis  

Post has attachment
A Value Investor's Analysis of Caterpillar (updated 15 May 2015)

I've analyzed Caterpillar's financial statements to see how well the company measures up to a set of criteria familiar to value investors. The approach used is based on, with some adjustments and additions, recommendations made by the legendary investor Benjamin Graham in his book, "The Intelligent Investor," which was first published in 1949.

Caterpillar is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company's shares are now trading for about $88 each.

In the quarter that ended on 31 March 2015, Caterpillar earned $1.86 per share (excluding certain items), which significantly beat the $1.35 Wall Street consensus forecast. See https://goo.gl/vqZ8k0 for a more detailed review, with many charts, of how Caterpillar performed during the quarter.

The analysis described here produces a set of GREEN, YELLOW, or RED grades and an all-encompassing Overall Score that can, in theory, be as high as 100 or as low as zero. The "Fairly Valued" criterion is considered more important than the others, and it is given extra weight when the Overall Score is calculated. The Overall Score must be at least 60 points for a company to qualify as a suitable candidate for a value investor.

Caterpillar's Overall Score is 52 of the 100 possible points, which is a decent, but not quite good enough result for this exercise. The score is below the 60-point cutoff, and Caterpillar, therefore, does not presently qualify for inclusion on my list of suitable value investments.

Check back here occasionally to see if the Overall Score has been recalculated to reflect new financial data or a significant change in company's share price.  The score typically moves in the opposite direction of the share price (i.e., less expensive shares, relative to company fundamentals, are preferred).

Caterpillar's grades on each of the seven Investment Suitability criteria are listed below, along with some of the factors that determine the grade.

1. The company's Size is substantial: GREEN
    Market Value: $54.2 billion (large cap)

2. The company is Conservatively Financed: RED
    Current ratio = 1.4 (>2.0 is conservative)
    Long-term debt/Working Capital = 225% (<150% is conservative)

3. The company produces Stable Earnings: GREEN
    Zero 4-quarter losses in the last five years (perfect)
    Earnings volatility = 28% (moderate)

4. The company achieves Growth in earnings & cash flow: YELLOW
    EPS growth rate (trailing year) = 6% (modest)
    EPS growth rate (five-year average) = 11% (good)
    FCF growth rate (trailing year) = -38% (poor)
    FCF growth rate (five-year average) = 5% (modest)

5. The company is Efficiently Profitable: YELLOW
    Cash Flow ROIC = 13% (okay)

6. The company pays a Healthy Dividend: GREEN
    Dividends paid for the last five years or longer
    Dividend 5-year average growth rate = 10.0%
    Dividend = 42% of last year's FCF (sustainable)

7. The company's shares are Fairly Valued: YELLOW
    Price/Earnings (last year) = 13.9 (appealing)
    Price/Earnings (five-year average) = 15.6 (moderate to pricy)
    Free Cash Flow/Market Value = 7.3% (appealing)
    Price/Book Value = 3.2 (less expensive than the five-year average of 3.8)
    Price/Sales = 1.0 (less expensive than the five-year average of 1.1)


In summary, Caterpillar achieves three GREEN grades, three YELLOW grades, one RED grade on the seven investment suitability criteria.  The grade on the especially important Fairly Valued criterion is YELLOW, which is a concern. The Overall Score is 52 of the 100 possible points, and because it's below the 60-point threshold, Caterpillar does not presently qualify for my list of suitable holdings for cautious value investors.

This post reports on the application of a particular quantitative methodology, relying on historical data, to evaluate companies for value investors. The methodology does not evaluate every aspect of a company's finances, performance, or value. Other analytical techniques will be more applicable for investors having different goals, circumstances, and tolerance for investment risk. The analysis should not be considered investment advice, nor does it constitute an offer or solicitation to buy or sell any security. The author might have a position in the companies mentioned. Accuracy is not guaranteed, the results are subject to change without notification.

---------------
EPS = Earnings Per Share
FCF = Free Cash Flow
ROIC = Return on Invested Capital


#caterpillar       #cat       #valueinvesting       #nac_financialanalysis  

Post has attachment
A Value Investor's Analysis of Microsoft (updated 14 May 2015)

I've analyzed Microsoft's financial statements to see how well the company measures up to a set of criteria familiar to value investors. The approach used is based on, with some adjustments and additions, recommendations made by the legendary investor Benjamin Graham in his book, "The Intelligent Investor," which was first published in 1949.

Microsoft develops and sells operating system and application software, software services, and a growing number of hardware items, such as game consoles and mobile phones. The company's shares are now trading for about $49 each.

In the quarter that ended on 31 March 2015, Microsoft earned $0.61 per share, which significantly beat the $0.51 Wall Street consensus forecast. See https://goo.gl/F9RRe0 for a more detailed review, with many charts, of how Microsoft performed during the quarter.

The analysis described here produces a set of GREEN, YELLOW, or RED grades and an all-encompassing Overall Score that can, in theory, be as high as 100 or as low as zero. The mark on the important "Fairly Valued" criterion is given extra weight in the formula to determine the Overall Score. The threshold for a company to qualify for the list of suitable candidates for a prudent value investor is an Overall Score of 60 points.

Microsoft's Overall Score is 64 of the 100 possible points, which is a very good result. The score is above the 60-point threshold, and Microsoft, therefore, qualifies for inclusion on my list of suitable value investments.

Check back here occasionally to see if the Overall Score has been recalculated to reflect new financial data or a significant change in company's share price.  The score typically moves in the opposite direction of the share price (i.e., less expensive shares, relative to company fundamentals, are preferred).

Microsoft's grades on each of the seven Investment Suitability criteria are listed below, along with some of the factors that determine the grade.

1. The company's Size is substantial: GREEN
    Market Value: $401.3 billion (mega-cap)

2. The company is Conservatively Financed: GREEN
    Current ratio = 2.9 (>2.0 is conservative)
    Long-term debt/Working Capital = 36% (<150% is conservative)

3. The company produces Stable Earnings: GREEN
    Zero 4-quarter losses in the last five years (perfect)
    Earnings volatility = 13% (modest)

4. The company achieves Growth in earnings & cash flow: YELLOW
    EPS growth rate (trailing year) = -10% (poor)
    EPS growth rate (five-year average) = 5% (modest)
    FCF growth rate (trailing year) = 17% (good)
    FCF growth rate (five-year average) = 9% (modest)

5. The company is Efficiently Profitable: GREEN
    Cash Flow ROIC = 27% (very good)

6. The company pays a Healthy Dividend: GREEN
    Dividends paid for the last five years or longer
    Dividend 5-year average growth rate = 17.8%
    Dividend = 37% of last year's FCF (easily sustainable with room to grow)

7. The company's shares are Fairly Valued: RED
    Price/Earnings (last year) = 20.1 (moderate to pricy)
    Price/Earnings (five-year average) = 13.5 (appealing)
    Free Cash Flow/Market Value = 6.5% (appealing)
    Price/Book Value = 4.5 (more expensive than the five-year average of 3.9)
    Price/Sales = 4.2 (more expensive than the five-year average of 3.6)


In summary, Microsoft achieves five GREEN grades, one YELLOW grade, one RED grade on the seven investment suitability criteria.  The grade on the especially important Fairly Valued criterion is RED, which is a concern. The Overall Score is 64 of the 100 possible points, and because it's above the 60-point threshold, Microsoft qualifies for my list of suitable holdings for cautious value investors.

This post reports on the application of a particular quantitative methodology, relying on historical data, to evaluate companies for value investors. The methodology does not evaluate every aspect of a company's finances, performance, or value. Other analytical techniques will be more applicable for investors having different goals, circumstances, and tolerance for investment risk. The analysis should not be considered investment advice, nor does it constitute an offer or solicitation to buy or sell any security. The author might have a position in the companies mentioned. Accuracy is not guaranteed, the results are subject to change without notification.

---------------
EPS = Earnings Per Share
FCF = Free Cash Flow
ROIC = Return on Invested Capital


#microsoft       #msft       #valueinvesting       #nac_financialanalysis  

Post has attachment
A Value Investor's Analysis of Qualcomm (updated 13 May 2015)

I've analyzed Qualcomm's financial statements to see how well the company measures up to a set of criteria familiar to value investors. The approach used is based on, with some adjustments and additions, recommendations made by the legendary investor Benjamin Graham in his book, "The Intelligent Investor," which was first published in 1949.

Qualcomm makes and licenses chips for advanced wireless devices. The company's shares are now trading for about $70 each.

In the quarter that ended on 29 March 2015, Qualcomm earned $1.40 per share (excluding certain items), which beat the $1.33 Wall Street consensus forecast. See http://goo.gl/NAlfBM for a more detailed review, with many charts, of how Qualcomm performed during the quarter.

The analysis described here produces a set of GREEN, YELLOW, or RED grades and an all-encompassing Overall Score that can, in theory, be as high as 100 or as low as zero. The mark on the important "Fairly Valued" criterion is given extra weight in the formula to determine the Overall Score. The threshold for a company to qualify for the list of suitable candidates for a prudent value investor is an Overall Score of 60 points.

Qualcomm's Overall Score is 63 of the 100 possible points, which is a good result. The score is above the 60-point threshold, and Qualcomm, therefore, qualifies for inclusion on my list of suitable value investments.

Check back here occasionally to see if the Overall Score has been recalculated to reflect new financial data or a significant change in company's share price.  The score typically moves in the opposite direction of the share price (i.e., less expensive shares, relative to company fundamentals, are preferred).

Qualcomm's grades on each of the seven Investment Suitability criteria are listed below, along with some of the factors that determine the grade.

1. The company's Size is substantial: GREEN
    Market Value: $116.2 billion (mega-cap)

2. The company is Conservatively Financed: GREEN
    Current ratio = 3.4 (>2.0 is conservative)
    Long-term debt/Working Capital = 0% (<150% is conservative)

3. The company produces Stable Earnings: GREEN
    Zero 4-quarter losses in the last five years (perfect)
    Earnings volatility = 7% (negligible)

4. The company achieves Growth in earnings & cash flow: YELLOW
    EPS growth rate (trailing year) = 6% (modest)
    EPS growth rate (five-year average) = 19% (good)
    FCF growth rate (trailing year) = -32% (poor)
    FCF growth rate (five-year average) = 8% (modest)

5. The company is Efficiently Profitable: GREEN
    Cash Flow ROIC = 16% (good)

6. The company pays a Healthy Dividend: GREEN
    Dividends paid for the last five years or longer
    Dividend 5-year average growth rate = 19.8%
    Dividend = 55% of last year's FCF (sustainability is a concern)

7. The company's shares are Fairly Valued: RED
    Price/Earnings (last year) = 16.2 (moderate to pricy)
    Price/Earnings (five-year average) = 18.9 (moderate to pricy)
    Free Cash Flow/Market Value = 4.4% (modest)
    Price/Book Value = 3.1 (less expensive than the five-year average of 3.3)
    Price/Sales = 4.2 (less expensive than the five-year average of 5.6)


In summary, Qualcomm achieves five GREEN grades, one YELLOW grade, one RED grade on the seven investment suitability criteria.  The grade on the especially important Fairly Valued criterion is RED, which is a concern. The Overall Score is 63 of the 100 possible points, and because it's above the 60-point threshold, Qualcomm qualifies for my list of suitable holdings for cautious value investors.

This post reports on the application of a particular quantitative methodology, relying on historical data, to evaluate companies for value investors. The methodology does not evaluate every aspect of a company's finances, performance, or value. Other analytical techniques will be more applicable for investors having different goals, circumstances, and tolerance for investment risk. The analysis should not be considered investment advice, nor does it constitute an offer or solicitation to buy or sell any security. The author might have a position in the companies mentioned. Accuracy is not guaranteed, the results are subject to change without notification.

---------------
EPS = Earnings Per Share
FCF = Free Cash Flow
ROIC = Return on Invested Capital


#qualcomm       #qcom       #valueinvesting      #nac_financialanalysis  

Post has attachment
A Value Investor's Analysis of PepsiCo (updated 12 May 2015)

I've analyzed PepsiCo's financial statements to see how well the company measures up to a set of criteria familiar to value investors. The approach used is based on, with some adjustments and additions, the sage advice offered by Benjamin Graham in his book, "The Intelligent Investor," first published in 1949.

PepsiCo is a global food and beverage company. In addition to the eponymous soft drinks, PepsiCo also owns the Frito-Lay snack food business. Unlike most other companies which divide their fiscal years into equal quarters, or nearly so, PepsiCo has three 12-week quarters and then one 16-week quarter.  The company's shares are now trading for about $96 each.

In the quarter that ended on 21 March 2015, PepsiCo earned $0.83 per share (excluding certain items), which beat the $0.79 Wall Street consensus forecast. See https://goo.gl/rUcRgE for a more detailed review, with many charts, of how PepsiCo performed during the quarter.

The analysis summarized here yields two types of results: a bottom-line Overall Score between zero and 100 points and a set of GREEN, YELLOW, or RED grades. The Overall Score takes into account each of the seven criteria, with the "Fairly Valued" test given more weight than the others. An Overall Score of 60 points is the threshold for a company to qualify as a suitable candidate for our prudent value investor. It's rare for the Overall Score to exceed 60 points if the company gets more than one RED grade.

PepsiCo's Overall Score is 48 of the 100 possible points, which is not good enough for this exercise. The score is below the 60-point cutoff, and PepsiCo, therefore, does not presently qualify for inclusion on my list of suitable value investments.

Check back here occasionally to see if the Overall Score has been recalculated to reflect new financial data or a significant change in company's share price.  The score typically moves in the opposite direction of the share price (i.e., less expensive shares, relative to company fundamentals, are preferred).

PepsiCo's grades on each of the seven Investment Suitability criteria are listed below, along with some of the factors that determine the grade.

1. The company's Size is substantial: GREEN
    Market Value: $144.8 billion (mega-cap)

2. The company is Conservatively Financed: RED
    Current ratio = 1.0 (>2.0 is conservative)
    Long-term debt/Working Capital = 2818% (<150% is conservative)

3. The company produces Stable Earnings: GREEN
    Zero 4-quarter losses in the last five years (perfect)
    Earnings volatility = 4% (negligible)

4. The company achieves Growth in earnings & cash flow: YELLOW
    EPS growth rate (trailing year) = -3% (poor)
    EPS growth rate (five-year average) = 3% (weak)
    FCF growth rate (trailing year) = 27% (very good)
    FCF growth rate (five-year average) = 11% (good)

5. The company is Efficiently Profitable: GREEN
    Cash Flow ROIC = 21% (very good)

6. The company pays a Healthy Dividend: GREEN
    Dividends paid for the last five years or longer
    Dividend 5-year average growth rate = 7.8%
    Dividend = 51% of last year's FCF (sustainable)

7. The company's shares are Fairly Valued: RED
    Price/Earnings (last year) = 22.2 (moderate to pricy)
    Price/Earnings (five-year average) = 18.4 (moderate to pricy)
    Free Cash Flow/Market Value = 5.4% (modest)
    Price/Book Value = 9.1 (more expensive than the five-year average of 5.5)
    Price/Sales = 2.2 (more expensive than the five-year average of 1.9)


In summary, PepsiCo achieves four GREEN grades, one YELLOW grade, two RED grades on the seven investment suitability criteria.  The grade on the especially important Fairly Valued criterion is RED, which is a concern. The Overall Score is 48 of the 100 possible points, and because it's below the 60-point threshold, PepsiCo does not presently qualify for my list of suitable holdings for cautious value investors.

This post reports on the application of a particular quantitative methodology, relying on historical data, to evaluate companies for value investors. The methodology does not evaluate every aspect of a company's finances, performance, or value. Other analytical techniques will be more applicable for investors having different goals, circumstances, and tolerance for investment risk. The analysis should not be considered investment advice, nor does it constitute an offer or solicitation to buy or sell any security. The author might have a position in the companies mentioned. Accuracy is not guaranteed, the results are subject to change without notification.

---------------
EPS = Earnings Per Share
FCF = Free Cash Flow
ROIC = Return on Invested Capital


#pepsico       #pep       #valueinvesting       #nac_financialanalysis  

A Value Investor's Analysis of IBM (updated 10 May 2015)

IBM's financial statements have been analyzed to see how well the company measures up to a set of criteria familiar to value investors. The approach used is based on, with some adjustments and additions, the sage advice offered by Benjamin Graham in his book, "The Intelligent Investor," first published in 1949.

IBM is the venerable technology giant that sells computer hardware, software, and services. The company's shares are now trading for about $173 each.

In the quarter that ended on 31 March 2015, IBM earned $2.91 per share (excluding certain items), which beat the $2.82 Wall Street consensus forecast. See https://goo.gl/V09hEl for a more detailed review, with many charts, of how IBM performed during the quarter.

The analysis summarized here yields two types of results: a bottom-line Overall Score between zero and 100 points and a set of GREEN, YELLOW, or RED grades. The Overall Score takes into account each of the seven criteria, with the most weight given to the "Fairly Valued" test. It's rare for the Overall Score to exceed 60 points if the company gets more than one RED grade. An Overall Score of 60 points is the threshold for a company to qualify as a suitable candidate for our prudent value investor.

IBM's Overall Score is 58 of the 100 possible points, which is a decent, but not quite good enough result for this exercise. The score is below the 60-point cutoff, and IBM, therefore, does not presently qualify as a suitable value investment.

Check back here occasionally to see if the Score has been recalculated to reflect new financial data or a significant change in company's share price.  The Score typically moves in the opposite direction of the share price (i.e., less expensive shares, relative to company fundamentals, are preferred).

IBM's grades on each of the seven Investment Suitability criteria are listed below, along with some of the factors that determine the grade.

1. The company's Size is substantial: GREEN
    Market Value: $171.4 billion (mega-cap)

2. The company is Conservatively Financed: RED
    Current ratio = 1.3 (>2.0 is conservative)
    Long-term debt/Working Capital = 321% (<150% is conservative)

3. The company produces Stable Earnings: GREEN
    Zero 4-quarter losses in the last five years (perfect)
    Earnings volatility = 10% (negligible)

4. The achieves Growth in earnings & cash flow: YELLOW
    EPS growth rate (trailing year) = -18% (poor)
    EPS growth rate (five-year average) = 9% (modest)
    FCF growth rate (trailing year) = 12% (good)
    FCF growth rate (five-year average) = 4% (weak)

5. The company is Efficiently Profitable: GREEN
    Cash Flow ROIC = 31% (very good)

6. The company pays a Healthy Dividend: GREEN
    Dividends paid for the last five years or longer
    Dividend 5-year average growth rate = 14.9%
    Dividend = 33% of last year's FCF (easily sustainable with room to grow)

7. The company's shares are Fairly Valued: YELLOW
    Price/Earnings (last year) = 14.3 (appealing)
    Price/Earnings (five-year average) = 13.3 (appealing)
    Free Cash Flow/Market Value = 7.8% (appealing)
    Price/Book Value = 13.9 (more expensive than the five-year average of 10.6)
    Price/Sales = 1.9 (less expensive than the five-year average of 2.0)


In summary, IBM achieves four GREEN grades, two YELLOW grades, one RED grade on the seven investment suitability criteria.  The grade on the Fairly Valued criterion, which is given the greatest weight when calculating the Overall Score, is YELLOW, which is a concern. The Score was found to be 58 of the 100 possible points, and because it's below the 60-point threshold, IBM does not presently qualify for a list of suitable holdings for cautious value investors.

This post reports on the application of a particular quantitative methodology, relying on historical data, to evaluate companies for value investors. The methodology does not evaluate every aspect of a company's finances, performance, or value. Other analytical techniques will be more applicable for investors having different goals, circumstances, and tolerance for investment risk. The analysis should not be considered investment advice, nor does it constitute an offer or solicitation to buy or sell any security. The author might have a position in the companies mentioned. Accuracy is not guaranteed, the results are subject to change without notification.

---------------
EPS = Earnings Per Share
FCF = Free Cash Flow
ROIC = Return on Invested Capital


#ibm           #valueinvesting       #nac_financialanalysis  
Wait while more posts are being loaded