Should you be investing in Brambles?

Should you be investing in Brambles?

Article image

If you find a well-covered, steadily rising dividend payment paired with strong and improving financial health, chances are you are looking at a high-quality company. 

Take Brambles (ASX:BXB), for example, which is a conservative high flyer company in the Basic Materials sector.

Brambles pays out a rolling 4.71% of its share price in dividend payments. I'd like to know if it can continue paying out this dividend. A good starting point would be to analyse any improvement or deterioration in financial health.

This is exactly what the Piotroski F-Score is designed to do.

Why you need to know the Piotroski F-Score

Celebrated accounting professor Joseph Piotroski is the man behind the F-Score: a simple indicator to highlight stocks showing the most likely prospects for outperformance amongst a basket of apparently undervalued companies.

The great thing about the F-Score is that it essentially is an entire quality and fundamental momentum screen in a single number. It's made up of nine checks separated into three main areas of financial analysis. First is profitability, where it examines operating profits and cash flow to make sure the business can sustain itself and pay dividends. Then come three checks on the capital structure of a business, followed by a final look at the firm’s operating efficiency.

Stocks scoring 8 or 9 are considered strong. Those scoring 2 or less are considered weak. 

Brambles, its F-Score, and what you need to do about it

Stockopedia applies algorithms to its stream of financial data to automatically calculate the Piotroski F-Score for every stock on the market. It shows that Brambles scores 9 out of a possible 9. 

By investing in companies scoring 8 or 9 by these measures, Piotroski showed that, over a 20-year test period through to 1996, the return earned by a value-focused investor could be increased by an astounding 7.5% each year. Even better, it suggests that the company is well-placed to continue to pay out attractive dividends.


What does this mean for potential investors?

Brambles 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 Brambles that you can find out about here.


About us

Stockopedia helps individual investors make confident, profitable choices in the stock market. Our StockRank and factor investing toolbox unlocks institutional-quality insights into thousands of global stocks. Voted “Best Investment Research Tools” and “Best Research Service” at the 2021 UK Investor Magazine awards.

Brambles's StockRank™

High FlyerConservative

Brambles's StockRank™

With a StockRank of 92, Brambles is more attractive than 92% of the 1,896 stocks we cover in Australasia, according to our proprietary ranking system.

See the full StockReport

Absolutely Perfect

"Trialed multiple other platforms - this is by far my favourite. Other platforms do not even have half the stuff that you can find on Stockopedia. Love it!"

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.