Looking at some ROIC (Return on Invested Capital) numbers, Plains All American Pipeline, L.P. (NYSE:PAA)’s ROIC Quality Score is 3.520411. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits. This formula is calculated by 5 year average Return on Invested Capital (ROIC) / Standard Deviation of the 5 year ROIC. The higher the ratio, the better as a higher score indicates a more stable return on invested capital.
There are often many decisions that will need to be made when setting up a plan to start investing in stocks. Investors may want to start by setting specific individual goals. Plotting out specific goals can help keep the process focused and in line. Once goals are outlined, investors may want to decide how much risk that they are able to take on. Once goals and risks are addressed, investors may want to start doing research on specific stocks or sectors. Once the research is complete, investors can start focusing on how to put together the stock portfolio. Finding the best stocks to add can take quite a bit of time, but putting in the extra analysis can provide a big boost to the portfolio.
We can now take a quick look at some historical stock price index data. Plains All American Pipeline, L.P. (NYSE:PAA) presently has a 10 month price index of 0.97039. 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 1.10797, the 24 month is 1.03525, and the 36 month is 1.09649. Narrowing in a bit closer, the 5 month price index is 1.09043, the 3 month is 1.00201, and the 1 month is currently 1.07564.
Ratios
Plains All American Pipeline, L.P. (NYSE:PAA) has a Price to Book ratio of 1.707717. This ratio is calculated by dividing the current share price by the book value per share. Investors may use Price to Book to display how the market portrays the value of a stock. Checking in on some other ratios, the company has a Price to Cash Flow ratio of 5.730705, and a current Price to Earnings ratio of 6.649237. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.
Checking in on some valuation rankings, Plains All American Pipeline, L.P. (NYSE:PAA) has a Value Composite score of 15. 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 10.
Leverage Ratio
The Leverage Ratio of Plains All American Pipeline, L.P. (NYSE:PAA) is 0.371641. 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.
Watching some historical volatility numbers on shares of Plains All American Pipeline, L.P. (NYSE:PAA), we can see that the 12 month volatility is presently 28.116100. The 6 month volatility is 21.471900, and the 3 month is spotted at 19.535000. Following volatility data can help measure how much the stock price has fluctuated over the specified time period. Although past volatility action may help project future stock volatility, it may also be vastly different when taking into account other factors that may be driving price action during the measured time period.
Scores
The Gross Margin Score is calculated by looking at the Gross Margin and the overall stability of the company over the course of 8 years. The score is a number between one and one hundred (1 being best and 100 being the worst). The Gross Margin Score of Plains All American Pipeline, L.P. (NYSE:PAA) is 26.00000. The more stable the company, the lower the score. If a company is less stable over the course of time, they will have a higher score.
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. Plains All American Pipeline, L.P. (NYSE:PAA) has an M-Score of -2.660903. 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.
Piotroski F-Score
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 Plains All American Pipeline, L.P. (NYSE:PAA) is 8. 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 Plains All American Pipeline, L.P. (NYSE:PAA) is 0.105770. 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.
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 Plains All American Pipeline, L.P. (NYSE:PAA) is 5453. The lower the ERP5 rank, the more undervalued a company is thought to be.
Buying and selling decisions can be crucial when managing the stock portfolio. It may be very difficult to keep emotions in check when making these important decisions. Sometimes, investors will become attached to a stock that had been thoroughly researched. Maybe the stock went on a run, but it has started to underperform. Investors may need to be able to sell that favorite stock when the time has come. Holding onto winners too long can eat up portfolio profits over the longer-term. Investors may opt to set up a list of criteria that they can follow in order to know when it is time to sell a stock that hasn’t been making the grade.