Navigating Our Stock Analysis Reports: A Step-By-Step Guide
Learn how to read the stock analysis reports we provide. While the reports contain all the necessary explanations, we acknowledge that sometimes you just need a step-by-step guide to help you jump in the water.
TL;DR
​Our analysis reports provide deep insights into a company by examining pivotal financial metrics and performance benchmarks - both historically and relative to the industry.
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Company​​
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Company Profile and Brief Overview - This part provides an introduction to the company, including a high-level summary of the report presented in a table format. It’s designed to help you quickly grasp what matters.
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Company Valuation - This part highlights the most important elements to understand if the company is overvalued, undervalued, or fairly valued.
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Company Growth - This part helps you understand the prospect of the company. If the company manages to grow consistently for a long period of time, it’s likely that this trend will continue.
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Management Efficiency - This part helps you understand how efficient the company’s management is by leveraging its assets and equity to increase revenue.
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Financial Strength - This part helps you understand if the company has a risk of going bankrupt and if it would be able to meet its debt obligations in the short and long term.
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Company vs. industry
​This section compares the company to its peers in the industry from two perspectives: average and median. The comparison is made in terms of:
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Valuation
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Yield
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Growth
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Management efficiency
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Analysts' recommendation
From this point on it's a bit long, if you're looking for a quicker read, focus on the green paragraphs for the bigger picture.
Report Structure Overview
Each section in the report follows a similar structure:
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Ratio Name and calculated Ratio Value
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Avg: the average over the period examined
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Mdn: the median over the period examined
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A detailed explanation of the value, its significance, and what it refers to
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Verdict: whether it is considered positive (✓), neutral (-), or negative (X)
In the industry comparison section, you'll find:
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Company: the company's calculated value
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Industry Avg: the industry average (based on a certain number of top companies operating in the same industry)
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Industry Mdn: the industry median (based on a certain number of top companies operating in the same industry)
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The Verdict is typically compared to the median as it better reflects the competition, considering that extreme values from certain companies may impact the average.
Part 1: Company Profile and Brief Overview
This section serves as your introduction to the company, providing a high-level overview to help you capture the core of the analysis. The rest of the report is a breakdown of the provided overview.
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Key Elements:
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Company - The company's stock ticker and registered name.
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General Info - The company's sector, industry, country, and stock exchange.
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Website - The company's official website.
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Company Description - The company's description as provided to the stock exchange.
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Data updated as of - The last day considered when the report was issued.
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Analysis Overview - This section serves as an executive summary of the entire report, enabling you to understand the company's historical performance in seconds. You can quickly grasp its performance in comparison to its own history and also compared to other companies in the same industry. The company's performance is categorized into four main topics:
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​Valuation - Examining the stock price to determine if it is overvalued or undervalued.
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Growth - Assessing the company's historical growth ability.
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Management Efficiency - Evaluating the company's management ability to generate revenue from its assets and equity.
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Financial Strength - Assessing the risk of investing in this company, including the likelihood of bankruptcy or the inability to meet debt obligations.
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Part 2: Company Valuation
This valuation section is designed to assist you in determining whether the stock price is reasonable, overvalued, or undervalued.
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Key Ratios:​
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Current PE (Price-to-Earnings) - This ratio, calculated by dividing the stock price by earnings (net revenue), serves as an indicator of whether the company's stock is overvalued or if investors anticipate high future growth.
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Forward PE (Forward Price-to-Earnings) - Calculated as the stock price divided by future earnings (analysts' estimation), this ratio offers a glimpse into anticipated future valuation.
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Current PS (Price-to-Sales) - This ratio, obtained by dividing the stock price by sales (revenue), reveals how much you would pay for every $1 of sales.
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PE Change - This metric indicates how much the PE ratio has changed during the examined period. A positive value indicates that the stock price has outpaced earnings growth, while a negative value suggests the opposite.
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PEG Ratio (Price/Earnings to Growth) - Calculated as (Stock Price / Earnings) / Earnings Per Share Growth, a PEG ratio below 1.0 suggests relative undervaluation.
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PE × PB (Price-to-Earnings × Price-to-Book Value) - This ratio, involving both earnings and book value, is used by some investors to assess whether a stock is undervalued, with a general rule of thumb of 22.5 or less.
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Moving Average - This ratio reflects the stock's average closing price over the past 50 or 200 days, offering insights into historical price trends.
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Fair Value - An estimation of a reasonable stock price based on analysts' future estimations (currently not available).
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Current Price - The latest known price of the company's stock.
Examining this company's performance over the years in comparison to the S&P 500, which includes the top 500 companies in the US market, provides valuable insights into its historical stock yield relative to the broader US market.
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For long-term investors who choose to invest in specific stocks, the objective is to achieve alpha yield—performance superior to investing in the entire market through the purchase of an ETF, known as beta yield.
Part 3: Company Growth
Understanding the company's growth over time is crucial for investors, as consistent growth across key areas often indicates strong potential for healthy returns and long-term sustainability.
We present both average and median growth figures, with the median usually offering a clearer picture of typical growth as it's less sensitive to outliers.
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Key Ratios:​
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RPS (Revenue Per Share) - Calculated by dividing the company's revenue by the number of outstanding shares, RPS provides insight into how much revenue each share represents.
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EPS (Earnings Per Share) - This metric, obtained by dividing net revenue by the number of outstanding shares, offers a per-share perspective of a company's earnings.
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BVPS (Book Value Per Share) - Theoretically representing what investors would receive if the company's assets were sold and all debts settled. However, it's important to note that the book value might not accurately reflect the actual market value of the company's assets. BVPS is determined by dividing the book value by the number of outstanding shares.
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FCF Per Share (Free-Cash-Flow Per Share) - Reflecting the cash available for repaying creditors, dividends, and interest. Free-Cash-Flow is divided by the number of outstanding shares, providing a per-share assessment of the company's cash flow.
Part 4: Management Efficiency
The effectiveness of a company's management is a crucial factor in assessing its ability to generate revenue. A company led by management skilled at leveraging assets and equity to generate profit is generally regarded as a sound investment.
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Key Ratios:
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ROA (Return On Assets) - This metric indicates a company's profitability relative to its total assets, providing insights into how efficiently the company utilizes its assets to generate a profit. Corporate management, analysts, and investors leverage ROA to assess operational efficiency.
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ROE (Return On Equity) - ROE provides valuable insights into how well the company utilizes equity to generate profit.
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Evolvement of ROA & ROE Over Time - This analysis measures whether the company has optimized the efficiency of ROA and ROE over time. We present both a percentage change and a graphical representation of recent years.
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Net Profit Margin - Calculated as Net Revenue divided by Total Revenue, the net profit margin reveals the profitability of a company by showing how much profit is generated from every $1 in sales. This metric considers all business expenses involved in earning those revenues.
Part 5: Financial Strength
The financial strength of a company serves as a critical indicator of its capability to pay off both short-term and long-term debt obligations. Companies might be highly profitable but could face bankruptcy if they are unable to meet their debt obligations.
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Key Ratios:​
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Debt / EBITDA - This ratio measures the portion of income available to pay down debt before accounting for interest, taxes, depreciation, and amortization. Lenders, analysts, and investors use it to evaluate a company's liquidity and financial health.
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Debt / Equity - This metric reveals the balance between debt and internal resources in a company's financing strategy. A higher ratio indicates greater reliance on debt, which can raise risk concerns.
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Current Ratio - A liquidity measure, the current ratio assesses a company's ability to meet short-term obligations within one year. It shows how effectively current assets cover current liabilities and debt. To calculate a company's current ratio, we divide its current assets by its current liabilities.
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Altman Z-Score - This formula evaluates a company's bankruptcy risk by considering profitability, leverage, liquidity, solvency and activity ratios. Scores closer to 0 suggest higher bankruptcy risk, while those closer to 3.0 indicate financial stability.
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Piotroski Score - Ranging from 0 to 9, this score evaluates a company's financial strength based on nine specific criteria. A higher score (closer to 9) indicates better financial standing, while a lower score (closer to 0) suggests weaker performance.
Company vs. Industry
Part 6: Valuation Comparison
Key Ratios:
See 'Part 2: Company Valuation' and 'Part 3: Company Growth'
Part 7: Yield Comparison
Yield is a return measure for an investment over a set period, typically a year, expressed as a percentage.
In our report, we focus on two types of yields: Earnings Yield and Dividend Yield. Comparing these yields to the industry provides a good indication of whether the stock's expected yield is considerably high or low.
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Key Ratios:​
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Earnings Yield - calculated as the ratio (Earnings Per Share / Stock Price), aims to predict the Return On Investment (ROI) you can expect if you were to purchase the stock at its current price.
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Dividend Yield - calculated as the ratio (Dividend Per Share / Stock Price), the dividend yield is a financial ratio that indicates how much a company pays out in dividends each year relative to its stock price. This ratio is expressed as a percentage.
Part 8: Growth Comparison
In this section, we compare the growth ratios of the past 5 years to industry benchmarks.
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Key Ratios:
Part 9: Management Efficiency Comparison
