Stock Fundamentals Archive

Mebane Faber Shareholder Yield Backtest

A commenter on Fat Pitch Financials recently suggested that I take a look at shareholder yield.  After reading my “How Does a Change in Shares Outstanding Impact Stock Returns?” article, they suggested that dividend investors might also be interested in shareholder yield, and also the related Mebane Faber version of shareholder yield.   I was not

Free Cash Flow to Enterprise Value Backtest – $50 Million Minimum Market Cap

This is a revised version of the backtest on the free cash flow to enterprise value ratio backtest posted a few weeks ago.  The free cash flow to enterprise value ratio is a rather sophisticated valuation ratio that should be a part of every value investors toolkit.  It is inspired in part by the discounted

Free Cash Flow to Enterprise Value Backtest

The free cash flow to enterprise value ratio is a rather sophisticated valuation ratio that should be a part of every value investors toolkit.  It is inspired in part by the discounted cash flows method of company valuation. I have previously backtested the price to free cash flow ratio, so it is high time that I

How Does a Change in Shares Outstanding Impact Stock Returns?

A reduction in shares outstanding can occur as a result of a company stock buyback. A buyback is when a company repurchases its stock with the goal of reducing the number of its share on the market. As you can imagine, a reduction in shares outstanding is likely to impact stock returns. However, I was not

Return on Invested Capital (ROIC) Backtest

The Return on Invested Capital (ROIC) ratio is a very popular measure of company “quality” among value investors. Many even use this metric as part of their valuation models to account for future sustainable growth. Professor Aswath Damodaran discusses the significance of ROIC in detail in his widely quoted paper, Return on Capital (ROC), Return on Invested

5-Year Average Return on Investment Backtest

I decided to also backtest the 5-Year Average Return on Investment (ROI) in order to see how it compared to my recent 5-Year Average Return on Equity Backtest. We can also compare this 5-year average ROI backtest to the trailing twelve-month Return on Investment ratio backtest performance I ran a few weeks ago. I used the data and

5-Year Average Return on Equity Backtest

I recently updated my Return on Equity backtest. One of the suggestions I received was to test the 5-year average return on equity. I decided to test that out and compare it to the trailing twelve-month return on equity ratio backtest performance. I used the data and backtesting tool provided by Portfolio123. The Portfolio123 backtesting eliminates the

Return on Equity Backtest

Updated March 1, 2015 with 2014 data. Originally posted June 11, 2014. The Return on Equity (ROE)  is a commonly used profitability metric. ROE measures a company’s efficiency at generating profits from every unit of shareholders’ equity. It is often used in conjunction with a DuPont analysis, which breaks down ROE into three components. Those components are profit

Return on Investment Backtest

Return on Investment (ROI) is a fundamental measure of profitability and efficiency based on how much net income is generated by a company’s total debt and equity.  Return on Investment is calculated as follows: Return on Investment = Income After Taxes / (Total Long Term Debt + Stockholders Equity) This fundamental is defined in Portfolio123, the bactesting tool I’m using, as the trailing

Gross Profits to Assets Ratio Backtest

The Gross Profits to Assets ratio is another profitability measure. This fundamental was recently mentioned by Ken Faulkenberry in the comments section of my Return on Assets Backtest article. Ken was interested in seeing a backtest of this fundamental. Apparently, the gross profits to total assets ratio is starting to gain popularity among value investors. It was