Evraz (LON:EVR) cover image
86 Reads (2 mins read)

Should you be investing in Evraz (LON:EVR)?

15th Mar by Jack Brumby

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 Evraz (LON:EVR), for example, which is classified as a speculative super stock company in the Basic Materials sector. The company pays out a rolling 13.1% of its share price in dividend payments. Can such a high yield really be sustainable, or is it just the market's way of telling us that this mining company is heading for a dividend cut? 

GET MORE DATA-DRIVEN INSIGHTS INTO LON:EVR »

Why you need to know the Piotroski F-Score

We can run a quick check by looking at the group's Piotroski F-Score, which looks at 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.

This measure was designed to identify the most likely candidates for outperformance amongst a basket of apparently undervalued companies. The great thing about the F-Score is that it is essentially an entire quality and fundamental momentum screen in a single number. Stocks scoring 8 or 9 are considered strong. Those scoring 2 or less are considered weak. 

Evraz (LON:EVR): is its 13.1% dividend yield safe?

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 Evraz (LON:EVR) scores 8 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.

Evraz's strong fundamental momentum, its unusually high yield of 13.1%, the relative strength of its share price of 41.2%, and its modest valuation of 7.51 times rolling earnings, certainly suggest this miner is worth looking at in greater depth.

Find more high-quality stocks

This F-Score suggests Evraz (LON:EVR) 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 Evraz's on Stockopedia's platform for retail investors.

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.

Share this article
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.
Share Price
610.2p
Change Today
2.59%
Evraz ( )

Stockopedia is here to help individual investors beat the markets by being the very best in stock analysis, research & community. Take a 30 day free trial of our extensive multi-award winning service and find out why more than ten thousand global investors can't live without it.

© Stockopedia 2019, Thomson Reuters, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.