Sizing Up Returns: How Do Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF), pdvWireless, Inc. (NasdaqCM:PDVW) Stack Up?

Today we are spotlighting shares of Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) and looking at how the firm stacks up in terms of valuation by the numbers.  One of the most important ratios to look at when weighing an investment decision is the Return on Equity of the company.  At the time of writing Construcciones y Auxiliar de Ferrocarriles, S.A. has an ROE of 0.061395. With ROE, Investors can see if they’re getting a good return on their money, while a company can evaluate how efficiently they’re utilizing shareholder’s equity.

Investors are often faced with difficult decisions when trading the equity market. Sometimes, the decision to sell a certain stock may be just as important as the decision to buy the stock in the first place. Individual investors may have done the research, had some good fortune, and are now dealing with a big winner in the portfolio. Even though a stock has had a big run, it may be time to unload and take some profits. Holding on to a winner too long can eat into profits that may have been better spent getting into another promising name. On the flip side, investors may have trouble letting go of an underperforming portfolio loser. The emotional attachment to a stock can cause the investor to hold onto a stock for way too long. Maybe the stock was thoroughly researched, but it just keeps going lower. Being able to cut the ties instead of waiting for a bounce back may be beneficial for portfolio health in the long run.

Drilling down into some additional metrics, we note that Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) has a Price to Book ratio of 1.988563. 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 7.211554, and a current Price to Earnings ratio of 32.389684. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.

After a recent scan, we can see that Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) has a Shareholder Yield of 0.016058 and a Shareholder Yield (Mebane Faber) of -0.02698. 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.

The Return on Invested Capital (aka ROIC) for Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) is 0.097210.  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 Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) is 3.208695.  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 Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) is 0.080730.

The Earnings to Price yield of Construcciones y Auxiliar de Ferrocarriles, S.A. BME:CAF is 0.030874.  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.  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 Construcciones y Auxiliar de Ferrocarriles, S.A. BME:CAF is 0.069636.  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 Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) is 0.061456.

Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) currently has a Montier C-score of 0.00000. This indicator was developed by James Montier in an attempt to identify firms that were cooking the books 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. 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.

At the time of writing, Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) has a Piotroski F-Score of 7. 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.

Shifting gears, we can see that Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF) has a Q.i. Value of 18.00000. 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.

Volatility

Watching some historical volatility numbers on shares of Construcciones y Auxiliar de Ferrocarriles, S.A. (BME:CAF), we can see that the 12 month volatility is presently 21.628300. The 6 month volatility is 28.330800, and the 3 month is spotted at 25.894300. 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.

Investors might be looking at various types of stocks that can be added to the portfolio. Selecting a wider range of equities may help the portfolio withstand prolonged market turmoil. Growth stocks typically have the potential to produce profit growth and above average revenues. Growth companies may reinvest a large amount of earnings back into the business. Fast growing companies can be attractive, but it may be important to verify whether or not shares are valued properly before buying in. Some investors may choose to select cyclical stocks. Cyclicals include companies that are very sensitive to the overall swings of the economy. Investors might also turn to adding foreign stocks to the portfolio. Keeping the portfolio diversified may end up being an important factor for longer-term investing success.

Placing pdvWireless, Inc. (NasdaqCM:PDVW) shares under the microscope we note that the firm has a current Return on Equity of -0.216708.  Simply put, this ratio determines how well the firm uses investment funds to generate profit.  This ratio is often considered “the mother of all ratios” as it often reveals how well a company is operating.

As we move deeper into the year, investors will be paying attention to which companies are well-positioned for future growth. Even if the current earnings reports are a mixed bag, investors can study which industries look they are taking the top spot. Many active investors may be focusing on which way estimates are trending heading into the company earnings release. Analysts will often make updates to projections shortly before and after the earnings numbers are provided. Many active investors may enjoy the volatility that comes with trading around earnings, but others will choose to let the heavy action pass before deciding which stocks to buy or sell next.  

In additiona to ROE, investors might also take into consideration some other ratios.  One of the most popular ratios is the “Return on Assets” (aka ROA).  This score indicates how profitable a company is relative to its total assets.  The Return on Assets for pdvWireless, Inc. (NasdaqCM:PDVW) is -0.179448.  This number is calculated by dividing net income after tax by the company’s total assets.  A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

The Return on Invested Capital (aka ROIC) for pdvWireless, Inc. (NasdaqCM:PDVW) is -1.711392.  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 pdvWireless, Inc. (NasdaqCM:PDVW) is 0.267566.  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 pdvWireless, Inc. (NasdaqCM:PDVW) is -1.401535.

After a recent scan, we can see that pdvWireless, Inc. (NasdaqCM:PDVW) has a Shareholder Yield of -0.013368 and a Shareholder Yield (Mebane Faber) of -0.01457. 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.

Quant Scores

Checking in on some valuation rankings, pdvWireless, Inc. (NasdaqCM:PDVW) has a Value Composite score of 86. 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 85.

Investors may be interested in viewing the Gross Margin score on shares of pdvWireless, Inc. (NasdaqCM:PDVW). The name currently has a score of 50.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score lands on a scale from 1 to 100 where a score of 1 would be considered positive, and a score of 100 would be seen as negative.

pdvWireless, Inc. (NasdaqCM:PDVW) has a current MF Rank of 15609. 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.

pdvWireless, Inc. (NasdaqCM:PDVW) has a current ERP5 Rank of 16274. The ERP5 Rank may assist investors with spotting companies that are undervalued. This ranking uses four ratios. These ratios are Earnings Yield, ROIC, Price to Book, and 5 year average ROIC. When looking at the ERP5 ranking, it is generally considered the lower the value, the better.

Price Index & Volatility

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 pdvWireless, Inc. (NasdaqCM:PDVW) is 56.279000.  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 pdvWireless, Inc. (NasdaqCM:PDVW) is 51.173600.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 48.504600.

Investors may be searching for various types of stocks to help diversify the portfolio. Growth stocks include shares of companies that may have the possibility of generating higher than average profit growth and revenues. These companies tend to pump earnings back into the business, and they generally expand quicker than the overall economy. Although growth stocks can be a bit riskier, they can also provide a higher level of reward down the line. Cyclical stocks consist of companies that typically will ride the wave of the overall economy. These shares tend to perform well when the economy is doing well and perform poorer when the economy is faltering.

We can now take a quick look at some historical stock price index data. pdvWireless, Inc. (NasdaqCM:PDVW) presently has a 10 month price index of 1.33623. 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 1.28056, the 24 month is 1.80000, and the 36 month is 1.66962. Narrowing in a bit closer, the 5 month price index is 1.31506, the 3 month is 1.01393, and the 1 month is currently 1.06850.