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Checking up on the financial health of Enquest

17th May by Jack Brumby

In investing, knowing which numbers you should pay attention to and which you should discard is half the battle. Honing in on the measures that tell us what’s really going on can save us a lot of time and pain. It also allows us to move faster than the competition.

At Stockopedia, we strive to identify these key measures. One of the most useful we have found so far is Piotroski’s F-Score - and the F-Score has good news for shareholders of small cap style neutral Enquest (LON:ENQ), which operates in the Energy sector. 

Enquest is a United Kingdom-based oil and gas development and production company. For the fiscal year ended 31 December 2018, Enquest Plc revenues increased from $627.5m to $1.3bn, making for $127.3m of net income.

GET MORE DATA-DRIVEN INSIGHTS INTO LON:ENQ »

Why the Piotroski F-Score matters

Followers of renowned accounting professor Joseph Piotroski are well aware of the checklist that made him famous in 2002. Piotroski is behind the F-Score: a simple indicator to highlight neglected stocks with improving prospects.

What's good about the F-Score is that it is essentially an entire quality and fundamental momentum screen in a single number, succinctly summing up the financial health trend of a company. Applying it as a filter on top of almost any strategy can help to increase returns and reduce risk.

Enquest's F-Score: what does it mean?

Enquest (LON:ENQ) scores 8 out of a possible 9. In his landmark academic paper "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers", Piotroksi showed that by investing in companies scoring 8 or 9 by these measures over a 20-year test period through to 1996, investor returns could be increased by an astounding 7.5% each year. Below, you can see exactly how LON:ENQ stacks up against the checklist.

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Find more high-quality stocks

This F-Score suggests Enquest is a promising investment candidate and is worthy of further research - but it is only a first step. It has been proven that higher F-Score stocks often trade at a premium compared to other stocks. Investors like to pay up for quality but its important not to pay too much. We suggest checking the various value factor measures for Enquest on the group's StockReport.

For years, the Stockopedia team has been reading through academic literature and analysing its own proprietary data to figure out which checklists, screens, and metrics can help take the guesswork out of investing. We arm investors with the tools they need to invest sensibly and avoid big losses. You can look through Stockopedia’s Piotroski F-Score screens to identify other investment candidates, or even create your own customised screen.

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