John Neff Value is a value investing strategy based on the rules of successful US fund manager John Neff. It combines demanding value criteria with elements of growth, quality and dividend income. Although he didn't like the term, Neff was a contrarian investor buying good companies with moderate growth and high dividends while out of favour, and selling them once they rose to fair value. One of the tools used by Neff is the Total Return Ratio, which is calculated using the price-to-earnings growth factor (PEG), but adjusted for dividend yield - PEGY. John Neff wrote: "If you buy stocks when they are out of favor and unloved, and sell them into strength when other investors recognize their merits, you'll often go home with handsome gains." During his tenure as manager of Vanguard's Windsor Fund between 1964 and 1995, Neff's average annual total return was 13.7%. more »
The PEGY is also known as the Price/Earnings to Growth and Dividend Yield Ratio or Dividend-yield adjusted PEG Ratio.
Stockopedia explains PEGY...
This is used by Peter Lynch and inversely by John Neff (who calls it the total return ratio). For stocks that pay a substantial dividend, the PEGY may be an even better measure than PEG. As with the PEG, the numbers are based on consensus analyst forecasts and therefore subject to forecasting errors.
This shows how many years consecutively the company has managed to grow its topline revenues (sales). i.e. Sales Streak = 3 shows that the company has grown its sales for the last 3 consecutive fiscal years.
Stockopedia explains Sales Gwth Streak...
Sales Growth is a very positive sign for growth investors and is a criteria in the Phillip Fisher screen that we have modelled.
The Price to Earnings Ratio (also called the PE ratio) is the primary valuation ratio used by most equity investors. It is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share.A hig P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio. The P/E ratio can be seen as being expressed in years, in the sense that it shows the number of years of earnings which would be required to pay back the purchase price, ignoring inflation. Unlike the EV/EBITDA multiple which is capital structure-neutral, the price-to-earnings ratio reflects the capital structure of the company in question. The reciprocal of the P/E ratio is known as the earnings yield.
Stockopedia explains P/E...
This is is the primary valuation ratio used by most equity investors. A high P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio. The P/E ratio can be seen as being expressed in years, in the sense that it shows the number of years of earnings which would be required to pay back the purchase price, ignoring inflation.
Unlike the EV/EBITDA multiple which is capital structure-neutral, the price-to-earnings ratio reflects the capital structure of the company in question
Free Cash Flow is calculated from the Statement of Cash Flows as Cash From Operations minus Capital Expenditures. Unlike earnings, it omits purely \paper only\"\"" expenses\""\""\"""""
Stockopedia explains FCF...
Free Cash Flow per share should be compared with Earnings per Share in order to understand whether a company is able to turn its earnings into cash or not! Ultimately every company needs to make cash to survive and without free cash flow a company will have to go begging to shareholders or resort to borrowing. The best companies are 'cash machines' - you should look for companies that make more free cashflow than earnings.
N.B. Cashflow can be very 'lumpy' as capital expenditures are not consistent from year to year. Also growing companies may have to invest heavily ahead of cashflow to keep up with demand.
Operating Profit - or Operating Income - is a measure of a company's earning power from ongoing operations, calculated as the difference between operating revenues and operating expenses. When a firm has zero non-operating income, then operating income is equal to EBIT (earnings before deduction of interest payments and income taxes).
Operating profit margin, also known as return on sales (ROS) is the ratio of operating profit (the amount that is left over after the variable costs of production such as wages, and raw materials have been paid) divided by sales. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt.
Stockopedia explains Op Mgn %...
A company's operating margin is most meaningfully compared against other companies in its own industry, as they will likely share similar cost structures. It is a good way to compares the quality of a company's activity to its competitors, specifically the company's pricing strategy and operating efficiency.