Ryobi Limited (TSE:5851): Are Shares Undervalued?

Ryobi Limited (TSE:5851) has a current MF Rank of 5938. Developed by hedge fund manager Joel Greenblatt, the intention of the formula is to spot high quality companies that are trading at an attractive price. The formula uses ROIC and earnings yield ratios to find quality, undervalued stocks. In general, companies with the lowest combined rank may be the higher quality picks.

As we move into the second half of the year, investors may be focused on portfolio performance over the first part of the year. They may be trying to put all the pieces together in order to create a solid plan that will provide sustained profits, even if market conditions deteriorate. This may involve introducing more diversity into the portfolio. One investor may evaluate a stock completely different than another. It may be important to do the necessary research on the overall industry when searching for the next big winner. As the next round of earnings reporting gets underway, investors will be watching to see which companies are positioned for growth over the foreseeable future. Investors will optimally have all their requisite boxes checked when scouting out the next portfolio moves.

Free Cash Flow Growth (FCF Growth) is the free cash flow of the current year minus the free cash flow from the previous year, divided by last year’s free cash flow.  The FCF Growth of Ryobi Limited (TSE:5851) is -0.922341.  Free cash flow (FCF) is the cash produced by the company minus capital expenditure.  This cash is what a company uses to meet its financial obligations, such as making payments on debt or to pay out dividends.  

The Free Cash Flow Score (FCF Score) is a helpful tool in calculating the free cash flow growth with free cash flow stability – this gives investors the overall quality of the free cash flow.  The FCF Score of Ryobi Limited (TSE:5851) is -0.124118.  Experts say the higher the value, the better, as it means that the free cash flow is high, or the variability of free cash flow is low or both.

The Return on Invested Capital (aka ROIC) for Ryobi Limited (TSE:5851) is 0.076173.  The Return on Invested Capital is a ratio that determines whether a company is profitable or not.  It tells investors how well a company is turning their capital into profits.  The ROIC is calculated by dividing the net operating profit (or EBIT) by the employed capital.  The employed capital is calculated by subrating current liabilities from total assets.  Similarly, the Return on Invested Capital Quality ratio is a tool in evaluating the quality of a company’s ROIC over the course of five years.  The ROIC Quality of Ryobi Limited (TSE:5851) is 7.483455.  This is calculated by dividing the five year average ROIC by the Standard Deviation of the 5 year ROIC.  The ROIC 5 year average is calculated using the five year average EBIT, five year average (net working capital and net fixed assets).  The ROIC 5 year average of Ryobi Limited (TSE:5851) is 0.056896.

Shareholder Yield

The Shareholder Yield is a way that investors can see how much money shareholders are receiving from a company through a combination of dividends, share repurchases and debt reduction.  The Shareholder Yield of Ryobi Limited (TSE:5851) is 0.018089.  This percentage is calculated by adding the dividend yield plus the percentage of shares repurchased.  Dividends are a common way that companies distribute cash to their shareholders.  Similarly, cash repurchases and a reduction of debt can increase the shareholder value, too.  Another way to determine the effectiveness of a company’s distributions is by looking at the Shareholder yield (Mebane Faber).  The Shareholder Yield (Mebane Faber) of Ryobi Limited TSE:5851 is 0.06238.  This number is calculated by looking at the sum of the dividend yield plus percentage of sales repurchased and net debt repaid yield.

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of Ryobi Limited (TSE:5851) is 3.  A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company.  The VC1 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, and price to earnings.  Similarly, the Value Composite Two (VC2) is calculated with the same ratios, but adds the Shareholder Yield.  The Value Composite Two of Ryobi Limited (TSE:5851) is 2.

Investors may be interested in viewing the Gross Margin score on shares of Ryobi Limited (TSE:5851). The name currently has a score of 17.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score lands on a scale from 1 to 100 where a score of 1 would be considered positive, and a score of 100 would be seen as negative.

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