Value Composition in Focus For Otter Tail Corporation (NasdaqGS:OTTR) and CareTrust REIT, Inc. (NasdaqGS:CTRE)

Checking in on some valuation rankings, Otter Tail Corporation (NasdaqGS:OTTR) has a Value Composite score of 49. 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 44. 

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As the next earnings season comes into focus, investors will be keeping watch on the performance of companies that they own. A company that continually exceeds earnings projections is most likely on the right track. On the other end of the spectrum, a company that frequently misses earnings projections might provide some insight to the fact that something isn’t right. Although it is important to keep track of earnings estimates and results, it shouldn’t be the only thing that the investor is looking at regarding the stock. Just because a company misses or beats expectations for one quarter may not mean anything super special. Tracking performance over a longer period of time can help paint the bigger picture of what is going on with the company. Sharp investors often have the ability to look deeper into the numbers to see the actual causes of an earnings hit or miss. Of course estimates are just that, estimates, and some analysts may be more accurate than others. 

In taking a look at some other notable technicals, Otter Tail Corporation (NasdaqGS:OTTR)’s ROIC is 0.066281. The ROIC 5 year average is 0.070653 and the ROIC Quality ratio is 13.834468. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits.

The Q.i. Value of Otter Tail Corporation (NasdaqGS:OTTR) is 37.00000.  The Q.i. Value is a helpful tool in determining if a company is undervalued or not.  The Q.i. Value is calculated using the following ratios: EBITDA Yield, Earnings Yield, FCF Yield, and Liquidity.  The lower the Q.i. value, the more undervalued the company is thought to be.

The FCF Yield 5yr Average is calculated by taking the five year average free cash flow of a company, and dividing it by the current enterprise value.  Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.  The average FCF of a company is determined by looking at the cash generated by operations of the company.  The Free Cash Flow Yield 5 Year Average of Otter Tail Corporation (NasdaqGS:OTTR) is -0.004294. 

Shareholder Yield
We also note that Otter Tail Corporation (NasdaqGS:OTTR) has a Shareholder Yield of 0.022077 and a Shareholder Yield (Mebane Faber) of 0.00683. 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.

MF Rank
Otter Tail Corporation (NasdaqGS:OTTR) has a current MF Rank of 8380. 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.

PI
We can now take aquick look at some historical stock price index data. Otter Tail Corporation (NasdaqGS:OTTR) presently has a 10 month price index of 1.22292. 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 1.30904, the 24 month is 1.28779, and the 36 month is 1.76981. Narrowing in a bit closer, the 5 month price index is 1.15031, the 3 month is 1.08957, and the 1 month is currently 1.08256.

Investors are constantly looking to find winning stocks that have been largely overlooked. With markets still riding high, this may not be the easiest thing in the world right now. Finding those perfect stocks before they become household names may take a lot of research and homework. Many investors will apply various strategies for picking stocks. If there was one that worked for everybody, it would make things super easy. Of course, this is not the case. Obviously, there are no guarantees in the stock market. Some investors may only focus on the fundamentals of a company and completely ignore the technicals. Others may choose to only watch technicals and never take a look at the underlying company information. Combining both areas of research may help give a better feel of what is going on with the stock in the long term and the short term. Individual investors who manage their own portfolios may need to put in a lot more time than those who don’t. Successful investors often have an uncanny way of filtering out the noise and keeping their focus on the right information.   

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The Value Composite score of CareTrust REIT, Inc. (NasdaqGS:CTRE) is 60.  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 CareTrust REIT, Inc. (NasdaqGS:CTRE) is 68.

Technicals

Investors constantly have to weigh risk against reward when trying to extract profits and maximum value from the stock market. Making educated investment decisions typically requires dedication, rational thinking, and self-control. Once the individual investor starts developing good habits, they can start to eliminate the bad ones that may be costing them enormous amounts of hard earned money. Everybody is prone to make mistakes at some point, and being able to realize what contributed to the mistake can help with corrective actions. Repeating the same mistakes over and over again in the stock market will most likely lead the investor down the wrong path. 

In taking a look at some other notable technicals, CareTrust REIT, Inc. (NasdaqGS:CTRE)’s ROIC is 0.061780. The ROIC 5 year average is 0.036879 and the ROIC Quality ratio is 5.197324. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits.

We also note that CareTrust REIT, Inc. (NasdaqGS:CTRE) has a Shareholder Yield of -0.217690 and a Shareholder Yield (Mebane Faber) of -0.14003. 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.

CareTrust REIT, Inc. (NasdaqGS:CTRE) has a current MF Rank of 8968. 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.

We can now take a quick look at some historical stock price index data. CareTrust REIT, Inc. (NasdaqGS:CTRE) presently has a 10 month price index of 1.37255. 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 1.41163, the 24 month is 1.33056, and the 36 month is 1.95428. Narrowing in a bit closer, the 5 month price index is 1.00413, the 3 month is 1.04125, and the 1 month is currently 1.04234.

The C-Score is a system developed by James Montier that helps determine whether a company is involved in falsifying 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 CareTrust REIT, Inc. (NasdaqGS:CTRE) is 3.00000.  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 fraudulent activity. The C-Score assists investors in assessing the likelihood of a company cheating in the books.

Successful stock market traders generally have a keen ability to cut losses short and let winners run. This may sound easy, but novice traders have the tendency to actually extend losses and fail to secure profits. New stock market traders may encounter a few different scenarios when starting out. They may make a few early trades that prove to be big winners, or they may get taken to the cleaner right out of the gate. When a trader experiences big wins from the start, this may create an inflated sense of confidence. On the flip side, a string of early losses can be so discouraging that the trader throws in the towel without really even getting into the game. 

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