Reference Information
"I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities." --Benjamin Graham
Key Growth Indicators
ROIC and the four growth categories represent key values that help predict a company's future. Steady, sustainable growth in the past is a good indicator of probable future growth. For more information on these indicators see Phil Town's Book Rule #1 Investing.
investing.
ROIC
The Return on Invested Capital (ROIC) is calculated by taking the net income and dividing by the total assets. The
mean ROIC is an arithmetic mean (the sum of the entries divided by the total entries).
Equity
The Stockholder's Equity (or just equity) is equal to the total assets minus the total liabilities of a company. The
growth rate from year to year is calculated by taking the current year's equity and dividing by the previous
year's equity then subtracting one. If either the current or previous year's equity is less than zero then the growth
rate is undefined. The mean equity is a geometric mean (the product of the entries to the power of one over the number of entries). The geometric mean represents the average yearly compounded growth rate.
EPS
Earnings Per Share (EPS) is the net income, or earnings, of a company divided by the total number of shares. The growth rate
and mean are calculated the same way as equity. If a company splits its stock, the EPS growth may show an abrupt decrease.
Sales
Sales are the gross reveues of a company. The growth rate and mean are calculated the same way as equity.
Free Cash
Free Cash is the amount of cash a company has on hand at the end of each year. The growth rate and mean
are calculated the same way as equity.
Average Years of Long Term Debt
The average years of long term debt is a ratio of long term debt to free cash. That is if a company put all
of its free cash at the end of the year toward paying off long term debt, it is the number of years until the
debt would be equal to zero.
PE Ratio History
The Price to Earnings (PE) ratio represents the multiplier of earnings to get the stock price. The PE ratio
is usually calculated according to the current stock price and the EPS for the last, or trailing, twelve months (TTM)
usually updated quarterly. However, herein, the PE ratio is the weekly closing price of the stock divided by the last reported annual earnings. The mean is calculated arithmetically. The histogram shows how often each stock has sold at various levels; the plot shows the PE ratio of the year range indicated. PE ratios above 75 are not shown on the plot. PE ratios equal to -1 represent an undefined PE ratio where the previous year's earnings were negative.
PE Margin
The PE Margin is the number used to sort the search results for the "Value" search. It is calculated by first taking the difference between last week's closing PE ratio and the mean PE ratio. The relative PE ratio is equal to this difference divided by the standard deviation of the PE ratio. Lower numbers (more negative) mean that the company is trading at PE ratios that are historically low.
Searching Companies
The "Performance" search results are returned based on each company's past growth where steadily growing companies rank the highest. The "Value" search results are based on the relative PE ratio.