The Return on Assets For CLS Holdings plc ($CLI.L) Placed Under Watchful Eye as it Hits 0.057616

{csv|m:251|id:21|s:Company}} (CLI.L) is boasting an Return on Assets number of 0.057616. ROA tells an investor how much after-tax profit a company generated for each $1 in assets. In other words, ROA measures a company’s net earnings in relation to all of the resources it had at its disposal—the shareholders’ capital plus short and long-term borrowed funds. Thus, return on assets is the most stringent test of return to shareholders. 

Investors often have to figure out how aggressive they want to be when getting into the stock market. There are individuals who may have had some initial success based on random luck, but diving without preparation can leave investors on the short end of the stick in the long run. Investors may be tempted by the next hot stock that is being talked about around the water cooler. Investors might not realize how risky a certain stock may be, and they may find out that the over performer has already made the run. Doing all the homework may involve tracking technicals, fundamentals, current economic data, and earnings releases. Putting in the time to do the proper research may help the investor see profits down the road.

FCF on Debt

Another ratio S&P Analyst Richard Tortoriello recommends to use is ‘Free Cash Flow to debt’. (‘Quantitative Strategies for Achieving Alpha’) This ratio shows how long it would take a company to pay back its debt using its current level of free cash flow. In his study, Tortoriello found that investing in the top 20% companies with the highest FCF/debt ratio generated substantially higher returns compared to the market.

Formula:

FCF on Debt = (Cash Flow from Operations−Capital Expenditure) / Total Debt

The FCF on debt number for CLS Holdings plc (CLI.L) stands at 0.057041.

Net Debt to Market Cap

This ratio gives a sense of how much debt a company has relative to its market value. Companies with high debt levels compared to their peers can be volatile. We calculate it as follows:

Net Debt to Market Cap = (Total Debt−Cash and ST Investments) / Market Cap

CLS Holdings plc (CLI.L) has a net debt to market cap ratio of 0.057041.

FCF

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 CLS Holdings plc (CLI.L) is 0.027584. 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 5 Year FCF Yield of CLS Holdings plc (CLI.L) is 0.024676. 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.

Most investors are more familiar with P/B or Price-to-book. This is just the inverted value.

Price-to-Book Ratio = Market Cap divided by Common Shareholders Equity

Market watchers may also be following some quality ratios for CLS Holdings plc (CLI.L). Robert Novy-Marx, a professor at the university of Rochester, discovered that gross profitability – a quality factor – has as much power predicting stock returns as traditional value metrics. He found that while other quality measures had some predictive power, especially on small caps and in conjunction with value measures, gross profitability generates significant excess returns as a stand alone strategy, especially on large cap stocks.The Gross profitability for (CLI.L) is 0.048607.
M-Score (Beneish)

The M-Score, conceived by accounting professor Messod Beneish, is a model for detecting whether a company has manipulated their earnings numbers or not. CLS Holdings plc (CLI.L) has an M-Score of -2.118227. The M-Score is based on 8 different variables: Days’ sales in receivables index, Gross Margin Index, Asset Quality Index, Sales Growth Index, Depreciation Index, Sales, General and Administrative expenses Index, Leverage Index and Total Accruals to Total Assets. A score higher than -1.78 is an indicator that the company might be manipulating their numbers.

Checking in on some valuation rankings, CLS Holdings plc (CLI.L) has a Value Composite score of 21. 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 16.

Investors may be scouring the exchanges for the next breakout stock. With the next earnings season in focus, investors will be keeping their eyes open for names that have upside potential. Tracking earnings results can help the investor see how healthy the company is. Investors may choose to research companies that produce large earnings beats. Taking the time to fully research the fundamentals can help the investor start piecing together the puzzle. Although many investors may not feel comfortable making trades around earnings, they can prepare for the aftermath and set up a plan to proceed once the market settles.