In addition to basic company statistics that give you an overall picture of a particular stock, Moning also gives you an advanced breakdown of several data points, giving you an in depth look of a stock’s health and history.
Here in the Total Sales graph, you can see the company’s total sales of their goods or services in each fiscal year. With the exception of certain sectors such as energy, where sales depend on commodities prices, generally speaking a healthy business continues to grow its total sales over the long term.
Free Cash Flow (or FCF) is the cash that remains after a company has paid all of its cash operational expenses, bills, and other capital expenditures to maintain and grow its business. Great companies and businesses tend to generate stable, growing FCF over time, fueling sustainable growth, acquisitions and higher, more stable dividends.
And EPS is calculated by dividing the company’s profit by the outstanding shares of its common stock. This serves as a great indicator of a company's profitability. Obviously you want this number to be relatively stable and growing for mature companies. But for new companies, it’s not unusual to see a negative EPS for several years.
Here in the Year-over-Year Growth section, Sales growth shows the year-to-year rate of change in a company's sales. High volatility can reveal the cyclicality of a business and/or industry changes. Mature companies generally show a steady and moderate growth, somewhere in the range of 3-7%.
FCF growth shows the year-to-year rate of change in a company's Free Cash Flow. Ideally you want to see FCF growth whenever possible. But for young companies that invest heavily to fuel growth, this graph can be quite bumpy.
And EPS growth shows how a company is growing its Earnings Per Share. The best businesses will steadily increase their earnings over time to help dividend growth and appreciation in stock price.
Here in the Profitability section, the Operating Margin graph indicates the general profitability by dividing the operating income (what's left after a company deducts its cost of goods sold and operating expenses) by its total sales. A figure above 12% is generally a good sign for most companies.
The net margin (sometimes known as profit margin), measures how much net income or profit is generated as a percentage of revenue. That is, NET profits divided by Revenues. Net margin is usually expressed as a percentage and illustrates how much of each dollar in revenue translates into profit.
And Return on Equity measures how many dollars of profit a company earns for every dollar that shareholders have invested in the firm. Warren Buffett, for one, favors firms with consistent returns in the mid-teens, which indicates they could possess what he coined an economic moat. It is calculated by dividing the company’s net income by the shareholders' equity. Above 10% here is generally a good sign for most companies.
Here in the Health section, Moning shows you the Earnings Payout Ratio, which is the percentage of net earnings paid out as a dividend. For most companies, a payout ratio below 60% is recommended (though Real Estate Investment Trusts, for instance, are one of the exceptions). A growing payout ratio means the dividend is growing faster than earnings or that earnings are steadily declining, and a volatile payout ratio can indicate a less stable company.
The Free Cashflow Payout Ratio is similar to the Earnings Payout ratio, it’s the percentage of free cash flow paid out as a dividend. Again, for most companies, we prefer to see a payout ratio below 60%. Unlike earnings, free cash flow measures the amount of real cash a firm generates after reinvesting that can be actually used to pay dividends. It can be volatile, but the safest companies regularly cover their dividends with free cash flow.
Interest coverage shows how many times the profit generated during a year can repay the interest on the debt paid during the same year. If a company has too much debt, interest payments can weigh heavily on its cash flow and put pressure on the expected dividends. Ideally, this number should be above 8 times.
And the Debt Equity Ratio tells you the proportion of a company's financing that comes from debt as opposed to equity. Companies with a high dependence on debt to fund their operations can be more likely to run into trouble if business conditions weaken, typically caused by higher interest payments and debt reimbursements. Generally, up to 1.5 it is still acceptable while anything above 2 is considered high.
And finally here in the Valuation section, Moning shows you the Price to Book measurement, the market capitalization of a company relative to its book value of equity on the balance sheet. Investors usually keep a close eye on this ratio it can identify undervalued stocks in the market. The lower the number, the more "fair" the price. But be careful to ensure that it's not a distressed company, and compare it to different companies across the sector.
The Price to Earnings ratio here is calculated by dividing the share price by the earnings per share. Note that the lower the PER, the more the stock is considered as undervalued, but that does not necessarily mean it a buy signal because it may be low for a good reason. As with all valuation ratios & multiples, always compare it against other companies in the market, in the particular sector/industry and with competitors and its history.
The PEG ratio is a company’s Price/Earnings ratio divided by its earnings growth rate over a period of time (usually over the next 1-3 years). What it does is to adjust the classic PE ratio by taking into account the growth rate expected in the future and help compare it to companies with different growth and P/E ratios.
Price to Sales measures how many years of sales the company is priced. This ratio, dividing market cap by sales, is used to calculate the valuation of a company compared to another in the same sector. A low PSR usually means that the company is undervalued.
The Price / FreeCashFlow values a company against its Free Cash Flow by taking its Share Price and dividing it by its FCF per Share. This ratio is similar to Price to Earnings, but omitting "paper only" expenses. This indicator makes it possible to value companies within very “capital-intensive” industries which carry out significant allocations to depreciation.
And lastly, the Enterprise Value (EV) represents a more complete evaluation of a company’s size than the Market Cap as it adds the net debt to the value of the equity. The EV/R ratio contrasts a company’s total EV relative to its Total Sales. EV/R is usually a better valuation multiple to compare with other companies than P/S as it takes into account the different leverage levels.
And there you go. Moning gives you rich, comprehensive insight into the health and history of any given stock, so that you can make confident, well-informed decisions as you add to your portfolio.
