A Technical Look into the Earnings Yield For Aker Solutions ASA (OB:AKSO), TC PipeLines, LP (NYSE:TCP)

Here will take a quick scan of Earnings Yield information on shares of Aker Solutions ASA (OB:AKSO). Currently, the Earnings to Price (Yield) is 0.053020, Earnings Yield is 0.061459, and Earnings Yield 5 year average is 0.074264. 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 often conduct stock analysis to help figure out which ones are a good buy, and at what price should they get in. The two main types of stock research used by investors are fundamental and technical analysis. Some investors will only study the fundamentals while others will only follow the technicals. Many will choose to combine the two methods in order to get a more well-rounded view of the stock. Fundamental analysis entails following company data. This may include studying the balance sheet, profit and loss statements, and the overall competency of company management. Fundamental analysts often use financial ratios to help understand company information. Technical analysts often study charts in order to define trends. This research is typically not concerned with how the underlying financials of the company look, but how the stock has been trading.

Checking in on some valuation rankings, Aker Solutions ASA (OB:AKSO) has a Value Composite score of 30. 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 33.

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 Aker Solutions ASA (OB:AKSO) is -1.619957.  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 Aker Solutions ASA (OB:AKSO) is -0.679363.  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 Aker Solutions ASA (OB:AKSO), we can see that the 12 month volatility is presently 30.931300. The 6 month volatility is 35.983600, and the 3 month is spotted at 32.867100. 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 Aker Solutions ASA (OB:AKSO) for last month was 0.88782. 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 Aker Solutions ASA (OB:AKSO) is 0.67235.
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 Aker Solutions ASA (OB:AKSO) over the past 52 weeks is 0.658000. The 52-week range can be found in the stock’s quote summary.

Quant Data
Shifting gears, we can see that Aker Solutions ASA (OB:AKSO) has a Q.i. Value of 40.00000. 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.

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 Aker Solutions ASA (OB:AKSO) is 2.00000.  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, Aker Solutions ASA (OB:AKSO) has a Piotroski F-Score of 5. 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.

Traders often employ unique systems when trying to beat the stock market. There are many different trading strategies or systems that can be used. New traders may find out very quickly that trading without a plan is a recipe for ruin. When starting out, it may require a lot of focus and dedication just to stay afloat. With more experience and hard work, traders may be able to eventually scoop up some of those profits that they were expecting when they started out. Some traders may have a few big wins right out of the gate. This may lead to overconfidence in the future if the proper precautions are not taken. Traders constantly need to be paying attention to everything that is going with the stock market. Moves can happen in the blink of an eye and without any notice. Being prepared to take a position at a moment’s notice can pay off big when the opportunity arises.

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 TC PipeLines, LP (NYSE:TCP) stands at 0.108431.  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 TC PipeLines, LP (NYSE:TCP) is 0.055925.  Further, the Earnings to Price yield of TC PipeLines, LP NYSE:TCP is -0.074682.  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.

Many new traders will jump right into the market without any concrete plan. They may be highly optimistic, but will soon realize that it takes more than optimism to secure profits in the stock market. Successful traders are usually good at having a backup plan for every trade. This may seem unnecessary to some, but when the harsh reality of a losing trade comes into the picture, it can be hard to rebound after taking a big hit. Rushing into trades to try and cover recent losses may also leave the trader on the outside looking in. Taking a rationalized approach may help the trader ride out the bumpy patches when they inevitably come.


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 TC PipeLines, LP (NYSE:TCP) is 49.  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 TC PipeLines, LP (NYSE:TCP) is 39.

TC PipeLines, LP (NYSE:TCP) currently has a Montier C-score of 2.00000. 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 TC PipeLines, LP (NYSE:TCP) is 2366.  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”.

TC PipeLines, LP (NYSE:TCP) has an M-score Beneish of -3.831298. 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 TC PipeLines, LP (NYSE:TCP) is 6306.  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 TC PipeLines, LP (NYSE:TCP) is 36.475900.  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 TC PipeLines, LP (NYSE:TCP) is 24.311600.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 35.311600.

We can now take a quick look at some historical stock price index data. TC PipeLines, LP (NYSE:TCP) presently has a 10 month price index of 1.46070. 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 1.53179, the 24 month is 0.74020, and the 36 month is 0.86852. Narrowing in a bit closer, the 5 month price index is 1.25058, the 3 month is 1.09997, and the 1 month is currently 1.02914.

ROIC

The Return on Invested Capital (aka ROIC) for TC PipeLines, LP (NYSE:TCP) is 0.190058.  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 TC PipeLines, LP (NYSE:TCP) is 2.108918.  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 TC PipeLines, LP (NYSE:TCP) is 0.092291.

Investors may be looking at all the different factors that come into play when searching for those next stocks to add to the portfolio. Maybe there are some names that have been on the radar, but the timing hasn’t been right to add them into the mix. As we get closer to the end of the year, investors may be looking back at individual stock performance over the past year. They may discover some great opportunities that weren’t available during the last review. Investors may also be keeping an eye on which sectors were the big winners during the latest earnings season. Branching out into new areas may help give the investor some alternative ideas for the next few quarters.

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