Checking up on the financial health of Newmark Security

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 micro cap super stock Newmark Security (LON:NWT), which operates in the Technology sector. The company designs, manufactures and supplies security systems.

Newmark Security (LON:NWT): recent performance

For the six months ended 31 October 2019, Newmark Security PLC revenues increased 3% to £10.1M, while net income increased from £432K to £1.1M

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.

Newmark Security's F-Score: what does it mean?

Newmark Security 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. To see exactly how LON:NWT stacks up against the checklist, view its StockReport.

What does this mean for potential investors?

Newmark Security has an F-Score that suggests it could be a promising investment candidate worthy of further research - but it's only a first step. Higher F-Score stocks can still have weaknesses and may trade at premium prices compared to other stocks. We've identified some areas of concern with Newmark Security that you can find out about here.