Saturday, August 10, 2019

TSLA Shows Decent Quality of Earnings

Tesla creates a lot of polarization.  It's like the industrial equivalent of our current political state.

I find that the main narrative is vitriolic in nature.  The people in the love-camp don't have a tonne to write about because Tesla's financial and operating results aren't meeting expectations, it's difficult to argue back.

I'm going to offer this item of information to the debate.  It's a quality of earnings I ran on the large cap automotive and automotive aftermarket.

TSLA's are good.  Not great, but good and they are the highest, along with two other firms in the group, which further impresses. 

The quality of earnings matter.  They tell us whether what's being presented can be trusted or not.


TSLA got a 6 out of 9, compared to a group average of less than 4.

Wednesday, July 24, 2019

Saturday, July 20, 2019

UPS Margin of Safety of 93%

According this Ohlson Clean Surplus valuation model, UPS is under-valued. Its "theoretical" price is $199 (why the quotes? because it's ridiculous to suppose that a model could really give you the true value of a stock, but it can be a useful guideline, ball park or an indication of a margin of safety).

CHRW is also trading with a margin of safety of 43%.


Thursday, July 18, 2019

THREE STOCKS WITH A VALUE GREATER THAN PRICE ACCORDING TO MODEL

An analysis of this 30 stock portfolio (large cap, medical technology, medical specialities) shows three companies with a value greater than price: SSMXF, WAT and HOCPY.

The valuation model is the Ohlson Clean Surplus.

Thursday, July 11, 2019

GlaxoSmithKline Scores High in Quality

I created a portfolio of the top pharmaceutical companies trading in the US and ran a quality of earnings analysis on them.  With the highest possible score being nine, GSK scored the best with seven.

Here are the results:

Quality of Earnings - Major Pharmaceuticals
Here's the balance of the companies in the portfolio.  We can see that AZN was the worst at two.
Quality of Earnings - Major Pharmaceuticals 2


Just for laughs, lets see how GSK and AZN have performed from a price perspective.


Interestingly, AZN has been outperforming GSK. It'll be interesting to say if this trend will continue or if it will, more correctly I believe, reverse.

Friday, June 7, 2019

We've Got a Winner

stock analysis
It's IPG.

Income 

Only three of the six stocks have a dividend: NLSN, JCDXF and IPG, and they all look quite good.  Over the past three years, each company has grown their dividend.

Let's look at the measures, the ranks and the final ranking in this category.  The measures are dividend yield, 3 year dividend per share CAGR and 1 year dividend per share growth.


Dividend
Yield
D/S 3 year
CAGR
1 year
D/S growth
SumFinal Rank
JCDXF2%
4
3%
4
8%
5
13

4
NLSN6%
6
5%
5
5%
4
15

5
IPG4%
5
12%
6
17%
6
17

6

IPG has some very nice dividend results.

Value

The value metrics are:
  • price to book
  • price to sales
  • price to earnings (if the company has negative earnings they get a rank of zero)
  • enterprise value to EBITDA.


P/BP/SP/EEV/EBITDASumFinal
Rank
TTD.21
1
11.1
1
103
2
43
1
51
RAMP.03
5
8.1
2
173
1
16
2
102
NLSN.03
4
1.3
4
negative
0
9
5
133
JCDXF.02
6
1.6
3
23
3
13
3
155
IPG.04
3
.8
5
13
4
9
4
166
GRPN.06
2
.7
6
negative
0
7
6
144
All of the companies in the group have what would generally be considered good P/B ratios except for TTD.  The same can be said for P/S but you have to exclude RAMP as well as TTD.  IPG PE ratio is good, JCDXF is acceptable and TTD and RAMP is very expensive.  From an EV/EBITDA perspective, GRPN, IPG and NLSN are attractive.  JCDXF is about average, RAMP is becoming more expensive and TTD is very expensive.

Taking it all together, IPG offers the best value.

Profitability

We'll look at six measures for the profitability factor:
  • gross profit to assets
  • net income margin
  • 5 year average pre-tax return on assets
  • 3 year average return on equity
  • operating income margin
  • free cash flow yield.


GP/ANM5 YR Avg
Pre-Tax ROA
3 Yr Ave
ROE
OMFCFSumRank
TTD.32
4
.18
6
.08
6
.07
4
.22
6
.01
2
286
RAMP.37
5
.03
3
.00
2
-.03
2
.04
2
.02
4
183
NLSN.20
3
-.11
1
.03
3
.01
3
.17
5
.06
5
204
JCDXF.15
2
.07
5
.04
4
.09
5
.08
3
-.01
1
204
IPG.08
1
.07
4
.06
5
.28
6
.10
4
.01
3
23

5
GRPN.76
6
.00
2
-.03
1
-.21
1
.02
1
.06
6
172

TTD had the best profitability results followed by IPG.

What I think


My instinct is to be more defensive given the declining momentum.  I'd like a healthy company with a good dividend and IPG fits the profile.  It's dividend is good.  It's profitability factors are appealing and its good value.  On the downside, its momentum is poor and its quality isn't standout.  However, I could live with those factors.

If You Just Want to Know The Highest Score

Here are the results in tabular form.

Price
Momentum
QualityGrowthIncomeValueProfitabilitySumFinal Rank
TTD646016235
RAMP565023214
NLSN111534151
JCDXF232454203
IPG324665266
GRPN453042182

Look at that, IPG has the highest score.  I like it.  I'm going to watch how it does, maybe take a small position.