Taking a look at valuation rankings for First Mid-Illinois Bancshares, Inc. (FMBH), we see that the stock has a Value Composite score of 40. 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 51. Swapping out shareholder yield with buyback yield we get the value composite three score of 52.
As any seasoned investor knows, markets can move up or down in the blink of an eye. Investors who attempt to beat the market without creating a plan may find themselves grasping at straws down the line. Building a plan that included the right level of risk may be different for every individual. Managing risk and staying on top of the stock portfolio can help investors ride out the storm when it eventually rolls in. Anybody who manages their own portfolio knows that it can be extremely challenging at times. Finding a consistent process that works when markets become volatile can be a big help to the investor. Controlling emotions and conducting the necessary research can help the investor make the difficult decisions when they crop up.
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 First Mid-Illinois Bancshares, Inc. (FMBH) is 5. 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.
Return on Assets
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 First Mid-Illinois Bancshares, Inc. (FMBH) is 0.011196. 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.
Free Cash Flow Growth (FCF Growth) is the free cash flow of the current year minus the free cash flow from the previous year, divided by last year’s free cash flow. The FCF Yield of First Mid-Illinois Bancshares, Inc. (FMBH) is 0.04729. Free cash flow (FCF) is the cash produced by the company minus capital expenditure. This cash is what a company uses to meet its financial obligations, such as making payments on debt or to pay out dividends. The Free Cash Flow 5 year outlook is a helpful tool in calculating the free cash flow growth with free cash flow stability – this gives investors the overall quality of the free cash flow. The FCF 5 Year Yield of First Mid-Illinois Bancshares, Inc. (FMBH) is 0.032704. Experts say the higher the value, the better, as it means that the free cash flow is high, or the variability of free cash flow is low or both.
The book to market ratio is the current share price of a company divided by the book value per share. A lower price to book ratio indicates that the stock might be undervalued. The book to market ratio for First Mid-Illinois Bancshares, Inc. (FMBH) stands at 0.701684.
Similarly, Price to cash flow ratio is another helpful ratio in determining a company’s value. The Price to Cash Flow for First Mid-Illinois Bancshares, Inc. (FMBH) is 14.916434. 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 First Mid-Illinois Bancshares, Inc. (FMBH) is 15.576446. This ratio is found by taking the current share price and dividing by earnings per share.
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. The EBITDA Yield for First Mid-Illinois Bancshares, Inc. (FMBH) is 42303.2922.
The Earnings to Price yield of First Mid-Illinois Bancshares, Inc. (FMBH) is 0.064199) is 0.05967. 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 First Mid-Illinois Bancshares, Inc. (FMBH) is 0.039857.
First Mid-Illinois Bancshares, Inc. (FMBH) has a current ERP5 Rank of 673. 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.
Investors may be trying to gauge the current business cycle phase and how that could potentially impact the portfolio. Business cycles can be one way to analyze portfolio performance. Early on in the cycle, profits tend to grow rapidly, sales tend to improve, and activity rebounds. In the middle of a cycle, growth may be peaking, strong credit growth may still be seen, and policy may swing neutral. Toward the later stages, growth may be moderate, earnings may come under pressure, and credit may tighten. Heading into a period of recession, credit may completely dry up, profits may decline sharply, and there may be policy easing. Investors will often have to adjust portfolio holdings that reflect the current state of a business cycle.
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