Inter Pipeline Ltd. (TSX:IPL), Computer Programs and Systems, Inc. (NasdaqGS:CPSI) Earnings & Valuation in Perspective on These Stocks

The EBITDA Yield for Inter Pipeline Ltd. (TSX:IPL) is 0.070164. The EBITDA Yield is a great way to determine a company’s profitability.  This number is calculated by dividing a company’s earnings before interest, taxes, depreciation and amortization by the company’s enterprise value.  Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

As most investors most likely have learned, there is no easy answer when deciding how to best take aim at the equity market, especially when faced with a volatile investing scenario. There are many different views when it comes to trading stocks. Investors may have to first come up with a plan in order to build a solid platform on which to compile a legitimate strategy. The vast amount of publically available data can seem overwhelming for novice investors. Making sense of the sea of information may do wonders for the health of the individual investor’s holdings.

Another useful indicator to assist in detmining rank is the ERP5 Rank.  This 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 Inter Pipeline Ltd. (TSX:IPL) is 8778.  The lower the ERP5 rank, the more undervalued a company is thought to be.

Looking further, 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 Inter Pipeline Ltd. (TSX:IPL) is 7940.  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”.

Piotroski F-Score

The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength. The score helps determine if a company’s stock is valuable or not. The Piotroski F-Score of Inter Pipeline Ltd. (TSX:IPL) is 3. A score of nine indicates a high value stock, while a score of one indicates a low value stock. The score is calculated by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings. It is also calculated by a change in gearing or leverage, liquidity, and change in shares in issue. The score is also determined by change in gross margin and change in asset turnover.

The Gross Margin Score is calculated by looking at the Gross Margin and the overall stability of the company over the course of 8 years.  The score is a number between one and one hundred (1 being best and 100 being the worst).  The Gross Margin Score of Inter Pipeline Ltd. (TSX:IPL) is 17.00000.  The more stable the company, the lower the score.  If a company is less stable over the course of time, they will have a higher score.

The Price Index is a ratio that indicates the return of a share price over a past period. The price index of Inter Pipeline Ltd. (TSX:IPL) for last month was 0.99246. 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 Inter Pipeline Ltd. (TSX:IPL) is 1.11101.

Valuation

Inter Pipeline Ltd. (TSX:IPL) presently has a current ratio of 0.12. The current ratio, also known as the working capital ratio, is a liquidity ratio that displays the proportion of current assets of a business relative to the current liabilities. The ratio is simply calculated by dividing current liabilities by current assets. The ratio may be used to provide an idea of the ability of a certain company to pay back its liabilities with assets. Typically, the higher the current ratio the better, as the company may be more capable of paying back its obligations.

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of Inter Pipeline Ltd. (TSX:IPL) is 42.  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 Inter Pipeline Ltd. (TSX:IPL) is 40.

The Price to book ratio is the current share price of a company divided by the book value per share.  The Price to Book ratio for Inter Pipeline Ltd. TSX:IPL is 2.266869.  A lower price to book ratio indicates that the stock might be undervalued.  Similarly, Price to cash flow ratio is another helpful ratio in determining a company’s value.  The Price to Cash Flow for Inter Pipeline Ltd. (TSX:IPL) is 10.353131.  This ratio is calculated by dividing the market value of a company by cash from operating activities.  Additionally, the price to earnings ratio is another popular way for analysts and investors to determine a company’s profitability.  The price to earnings ratio for Inter Pipeline Ltd. (TSX:IPL) is 15.714447. This ratio is found by taking the current share price and dividing by earnings per share.

FCF
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 Inter Pipeline Ltd. (TSX:IPL) is -0.005841.

Every individual investor strives to make the best possible stock investment decisions. New investors may have a limited knowledge of how the stock market functions. Studying the basics and accumulating as much knowledge as possible can help the investor create a cornerstone for future success. Everybody has to start somewhere, but continually adding to the market education pool might help the investor see something that they might not have noticed before. Taking a view of the stock market from various angles can help build a more robust databank from which to work from. Because market environments are always shifting, investors may need to do a little extra homework in order to stay ahead of the curve.

The EBITDA Yield for Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 0.070158. This number is calculated by dividing a company’s earnings before interest, taxes, depreciation and amortization by the company’s 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 EBITDA Yield is a great way to determine a company’s profitability.

Investing in the stock market offers the potential for big returns. On the flip side, investors can also experience major losses when trading equities. Investors are typically trying their best to maximize returns while limiting losses. Figuring out the best way to do this is no easy proposition. There may be periods where everything seems to be working out, and the returns are rolling in. There may be other times when nothing seems to be going right, and the losses start to pile up. Nobody can predict with pinpoint certainty which way the market will shift in the future. Preparing the portfolio for multiple scenarios can help the investor stick it out when the waters get choppy. Having a properly diversified stock portfolio may help investors ride out the turbulence when it inevitably takes control of the market.  

ROIC

The Return on Invested Capital (aka ROIC) for Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 0.408685.  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 Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 1.335431.  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 Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 0.765566.

Another useful indicator to assist in detmining rank is the ERP5 Rank.  This 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 Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 2604.  The lower the ERP5 rank, the more undervalued a company is thought to be.

Looking further, 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 Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 3543.  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”.

Piotroski F-Score

The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength. The score helps determine if a company’s stock is valuable or not. The Piotroski F-Score of Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 6. A score of nine indicates a high value stock, while a score of one indicates a low value stock. The score is calculated by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings. It is also calculated by a change in gearing or leverage, liquidity, and change in shares in issue. The score is also determined by change in gross margin and change in asset turnover.

Gross Margin
The Gross Margin Score is calculated by looking at the Gross Margin and the overall stability of the company over the course of 8 years.  The score is a number between one and one hundred (1 being best and 100 being the worst).  The Gross Margin Score of Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 48.00000.  The more stable the company, the lower the score.  If a company is less stable over the course of time, they will have a higher score.

Price Index

The Price Index is a ratio that indicates the return of a share price over a past period. The price index of Computer Programs and Systems, Inc. (NasdaqGS:CPSI) for last month was 1.13253. 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 Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 0.98410.

Shareholder Yield, Shareholder Yield (Mebane Faber)

The Shareholder Yield is a way that investors can see how much money shareholders are receiving from a company through a combination of dividends, share repurchases and debt reduction. The Shareholder Yield of Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is -0.001496. This percentage is calculated by adding the dividend yield plus the percentage of shares repurchased. Dividends are a common way that companies distribute cash to their shareholders. Similarly, cash repurchases and a reduction of debt can increase the shareholder value, too. Another way to determine the effectiveness of a company’s distributions is by looking at the Shareholder yield (Mebane Faber). The Shareholder Yield (Mebane Faber) of Computer Programs and Systems, Inc. NasdaqGS:CPSI is 0.02187. This number is calculated by looking at the sum of the dividend yield plus percentage of sales repurchased and net debt repaid yield.

The Price to book ratio is the current share price of a company divided by the book value per share. The Price to Book ratio for Computer Programs and Systems, Inc. NasdaqGS:CPSI is 2.107860. A lower price to book ratio indicates that the stock might be undervalued. Similarly, Price to cash flow ratio is another helpful ratio in determining a company’s value. The Price to Cash Flow for Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 10.483298. This ratio is calculated by dividing the market value of a company by cash from operating activities. Additionally, the price to earnings ratio is another popular way for analysts and investors to determine a company’s profitability. The price to earnings ratio for Computer Programs and Systems, Inc. (NasdaqGS:CPSI) is 22.349293. This ratio is found by taking the current share price and dividing by earnings per share.

Investors are usually trying to figure out the best strategy to use when tackling the equity market. Because there is no one perfect method for picking winning stocks, investors may have to try various techniques before they get it right. There are many different factors that can affect the financial health of a company, and this makes it hard to concoct a formula that works well across the board. Studying all the data can help with investing decisions, but it is typically more important to be focusing on the right information. Knowing exactly what data should be studied may only come by logging many hours of research.

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