Can These Stocks Create Value For Investors? ZCL Composites Inc. (TSX:ZCL), Cloud Peak Energy Inc. (NYSE:CLD)

Investors may be interested in viewing the Gross Margin score on shares of ZCL Composites Inc. (TSX:ZCL). The name currently has a score of 9.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score lands on a scale from 1 to 100 where a score of 1 would be considered positive, and a score of 100 would be seen as negative.  The low score of 9.00000 for ZCL Composites Inc. indicates a top score for stability and growth.

Market watchers diligently track the companies they think can do well to grow earnings. The goal is typically to discover stocks that are most likely to outperform in the future. Many investors like to keep tabs on sell-side analyst views. Following the direction estimates are trending may provide a deeper glimpse into the health of a company. Investors may need to follow a disciplined system which may help keep emotions in check when making investment decisions. On the other end, it may be necessary to craft a new strategy if the old system isn’t providing the types of expected returns. It can also become very time-consuming to keep up with shorter-term trends and events. Managing the short-term plan with the long-term plan can be difficult given the existing economic climate.

Checking in on some valuation rankings, ZCL Composites Inc. (TSX:ZCL) has a Value Composite score of 37. 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 28.

In trying to determine the current valuation of ZCL Composites Inc. (TSX:ZCL) shares, we note that the Book to Market ratio of the shares stands at 0.352716. It’s commonly accepted that a Book to Market ratio greater than one indicates that the shares might be undervalued.  The book to market ratio has some limitations in certain industries however where intangible assets (such as knowledge) often are not represented on a balance sheet. The ratio is calculated by dividing the market price per share by book value per share.  

At the time of writing, ZCL Composites Inc. (TSX:ZCL) 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.

ZCL Composites Inc. (TSX:ZCL) has a current ERP5 Rank of 1854 . The ERP5 Rank may assist investors with spotting companies that are undervalued. This ranking uses four ratios. These ratios are Earnings Yield, ROIC, Price to Book, and 5 year average ROIC. When looking at the ERP5 ranking, it is generally considered the lower the value, the better.

Ever wonder how investors predict positive share price momentum?  The Cross SMA 50/200, also known as the “Golden Cross” is the fifty day moving average divided by the two hundred day moving average.  The SMA 50/200 for ZCL Composites Inc. (TSX:ZCL) is currently 0.97606.  If the Golden Cross is greater than 1, then the 50 day moving average is above the 200 day moving average – indicating a positive share price momentum.  If the Golden Cross is less than 1, then the 50 day moving average is below the 200 day moving average, indicating that the price might drop.

The Leverage Ratio of ZCL Composites Inc. (TSX:ZCL) is 0.000000.  Leverage ratio is the total debt of a company divided by total assets of the current and past year divided by two.  Companies take on debt to finance their day to day operations.  The leverage ratio can measure how much of a company’s capital comes from debt.  With this ratio, investors can better estimate how well a company will be able to pay their long and short term financial obligations.

ROA & ROIC

There are many different tools to determine whether a company is profitable or not.  One of the most popular ratios is the “Return on Assets” (aka ROA).  This score indicates how profitable a company is relative to its total assets.  The Return on Assets for ZCL Composites Inc. (TSX:ZCL) is 0.122389.  This number is calculated by dividing net income after tax by the company’s total assets.  A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

The Return on Invested Capital (aka ROIC) for ZCL Composites Inc. (TSX:ZCL) is 0.438279.  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 ZCL Composites Inc. (TSX:ZCL) is 4.057387.  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 ZCL Composites Inc. (TSX:ZCL) is 0.301971.

Investors considering positions in Cloud Peak Energy Inc. (NYSE:CLD), might be interested in the Gross Margin Score of the company. The shares currently have a score of 40.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score lands on a scale from 1 to 100 where a score of 1 would be considered positive, and a score of 100 would be seen as negative.  The low score of 40.00000 for Cloud Peak Energy Inc. indicates a top score for stability and growth.

At times, investors may be prone to making impulsive or irrational decisions when it comes to the stock market. Finding a way to leave emotions out of important investing decisions can greatly assist the investor in achieving their goals. Investors who stay committed to a plan may be able to fight off emotional urges when certain situations arise. Investors may find it useful to rebalance the portfolio as opposed to chasing market performance when adjustments need to be made. Making sure the stock portfolio is aligned to suit the goals of the individual investor may play an important role in being able to consistently sustain profits well into the future.

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 Cloud Peak Energy Inc. (NYSE:CLD) 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.

Turning to valuation, Cloud Peak Energy Inc. (NYSE:CLD) has a Value Composite score of 5. 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 11.

At the time of writing, Cloud Peak Energy Inc. (NYSE:CLD) has a Piotroski F-Score of 6. 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.

Cloud Peak Energy Inc. (NYSE:CLD) has a current ERP5 Rank of 7172 . The ERP5 Rank may assist investors with spotting companies that are undervalued. This ranking uses four ratios. These ratios are Earnings Yield, ROIC, Price to Book, and 5 year average ROIC. When looking at the ERP5 ranking, it is generally considered the lower the value, the better.

Shifting gears, we can see that Cloud Peak Energy Inc. (NYSE:CLD) has a Q.i. Value of 31.00000. 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.

PI & Volatility

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 Cloud Peak Energy Inc. (NYSE:CLD) is 53.070100.  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 Cloud Peak Energy Inc. (NYSE:CLD) is 73.236800.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 61.760900.

We can now take a quick look at some historical stock price index data. Cloud Peak Energy Inc. (NYSE:CLD) presently has a 10 month price index of 0.87027. 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 0.93333, the 24 month is 1.67708, and the 36 month is 0.50313. Narrowing in a bit closer, the 5 month price index is 0.75058, the 3 month is 0.96119, and the 1 month is currently 1.08784.