Earnings Yield is calculated by taking the operating income or earnings before interest and taxes (EBIT) and dividing it by the Enterprise Value of the company.  The Earnings Yield for Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) stands at 0.083328.  Earnings Yield helps investors measure the return on investment for a given company.  Similarly, the Earnings Yield Five Year Average is the five year average operating income or EBIT divided by the current enterprise value.  The Earnings Yield Five Year average for Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 0.054814.  Further, the Earnings to Price yield of Beijing Tong Ren Tang Chinese Medicine Company Limited SEHK:3613 is 0.054773.  This is calculated by taking the earnings per share and dividing it by the last closing share price.  This is one of the most popular methods investors use to evaluate a company’s financial performance.

Investors may be circling the wagons wondering what’s in store for the stock market over the next few months. Capitalizing on the current trends may be just what the doctor ordered. Searching for value in the current investing landscape may be a priority for some investors. The mindset of one investor may be completely different from another. Sometimes stocks that look too good to be true actually are, and those that are actually very good may not look that enticing. Keeping a close watch on technicals and fundamentals may be a good way to start filtering through the vast sea of equities. Many stock enthusiasts will also keep a sharp focus on positive estimate revisions to help gain an edge in the markets. Whatever the strategy, investors will no doubt be searching far and wide for consistent outperformers.

Quant Signals – Value Composite, C- Score, MF Rank, M-Score, ERP5

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 56.  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 Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 50.

Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) currently has a Montier C-score of 2.00000. This indicator was developed by James Montier in an attempt to identify firms that were altering financial numbers in order to appear better on paper. The score ranges from zero to six where a 0 would indicate no evidence of book cooking, and a 6 would indicate a high likelihood of something amiss. A C-score of -1 would indicate that there is not enough information available to calculate the score. Montier used six inputs in the calculation. These inputs included a growing difference between net income and cash flow from operations, increasing receivable days, growing day’s sales of inventory, increasing other current assets, decrease in depreciation relative to gross property plant and equipment, and high total asset growth.  

Typically bull markets are times when investors may be willing to be a bit more speculative with stock selection. Managing risk is generally at the forefront of many strategies. Investors trying to shift the odds in their favor may be searching for the perfect balance and diversification to help mitigate the risk and enjoy healthier profits. With so many different stocks to choose from, it may take a while to zoom in or a particular set. Investors will also be watching the next wave of economic data to get a better sense of how the overall economy is fairing. With so much noise in the markets, it may be necessary to narrow the gaze in order to set the table for success. Investors may be on the lookout for the major catalyst that either keeps the bulls charging into the second half the year, or wakes up the sleeping bears.

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 Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 1570.  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”.

Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) has an M-score Beneish of -2.105720. This M-score model was developed by Messod Beneish in order to detect manipulation of financial statements. The score uses a combination of eight different variables. The specifics of the variables and formula can be found in the Beneish paper “The Detection of Earnings Manipulation”.

The last signal we’ll look at is the ERP5 Rank.  The ERP5 Rank 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 Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 2730.  The lower the ERP5 rank, the more undervalued a company is thought to be.

With equity investing, there will constantly be worries and fears. The volatility in the market that accompanies these fears may trick investors into thinking the next bear market is on the doorstep. During a market-wide sell off, many stocks may experience the pain. Over time, many may gain back the ground they lost and return to previous levels. The biggest names may be the ones to recoup the losses the quickest. However, many investors might get stuck waiting for a rebound that just isn’t going to happen. Having the flexibility to adapt to market conditions may help repair a damaged portfolio. Sometimes a readjustment may be needed in order to regain some confidence. As the next round of earnings reports start to come in, investors will be keeping a close watch to see which companies produce the largest surprises, both positive and negative.

Volatility/PI

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 Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 36.521300.  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 Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 34.596900.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 35.740100.

We can now take a quick look at some historical stock price index data. Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) presently has a 10 month price index of 0.91654. 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 1.03906, the 24 month is 1.13364, and the 36 month is 1.23340. Narrowing in a bit closer, the 5 month price index is 0.77398, the 3 month is 0.78954, and the 1 month is currently 0.91318.

ROIC

The Return on Invested Capital (aka ROIC) for Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 0.946258.  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 Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 11.569977.  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 Beijing Tong Ren Tang Chinese Medicine Company Limited (SEHK:3613) is 0.846205.

Doing the necessary homework, investors have a wealth of information about publically traded stocks. Figuring out which ones are going to steadily outperform can be a tricky task. Many investors opt to follow what covering sell-side analysts think about certain stocks. Following analyst updates to estimates and targets may help gauge overall stock sentiment. However, solely following analyst views may not be enough to put the entire investing puzzle together. Technical traders may want to still keep tabs on the fundamentals, and vice-versa.  

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