Stock Focus: Magic Formula Review For ServiceNow, Inc. (NYSE:NOW), DuPont de Nemours, Inc. (NYSE:DD)

Source: howebusinessdaily.com

ServiceNow, Inc. (NYSE:NOW) has a current MF Rank of 11585. 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.

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Checking in on some valuation rankings, ServiceNow, Inc. (NYSE:NOW) has a Value Composite score of 80. Developed by James O’Shaughnessy, the VC score uses five valuation ratios. These ratios are price to earnings, price to cash flow, EBITDA to EV, price to book value, and price to sales. The VC is displayed as a number between 1 and 100. In general, a company with a score closer to 0 would be seen as undervalued, and a score closer to 100 would indicate an overvalued company. Adding a sixth ratio, shareholder yield, we can view the Value Composite 2 score which is currently sitting at 82.

ServiceNow, Inc. (NYSE:NOW) has a Price to Book ratio of 39.109984. This ratio is calculated by dividing the current share price by the book value per share. Investors may use Price to Book to display how the market portrays the value of a stock. Checking in on some other ratios, the company has a Price to Cash Flow ratio of 47.432690, and a current Price to Earnings ratio of 17637.903465. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.

Shifting gears, we can see that ServiceNow, Inc. (NYSE:NOW) has a Q.i. Value of 55.00000. The Q.i. Value ranks companies using four ratios. These ratios consist of EBITDA Yield, FCF Yield, Liquidity, and Earnings Yield. The purpose of the Q.i. Value is to help identify companies that are the most undervalued. Typically, the lower the value, the more undervalued the company tends to be.

Watching some historical volatility numbers on shares of ServiceNow, Inc. (NYSE:NOW), we can see that the 12 month volatility is presently 38.101300. The 6 month volatility is 31.004600, and the 3 month is spotted at 30.508100. Following volatility data can help measure how much the stock price has fluctuated over the specified time period. Although past volatility action may help project future stock volatility, it may also be vastly different when taking into account other factors that may be driving price action during the measured time period. 

At the time of writing, ServiceNow, Inc. (NYSE:NOW) has a Piotroski F-Score of 6. The F-Score may help discover companies with strengthening balance sheets. The score may also be used to spot the weak performers. Joseph Piotroski developed the F-Score which employs nine different variables based on the company financial statement. A single point is assigned to each test that a stock passes. Typically, a stock scoring an 8 or 9 would be seen as strong. On the other end, a stock with a score from 0-2 would be viewed as weak.

Investors may be interested in viewing the Gross Margin score on shares of ServiceNow, Inc. (NYSE:NOW). The name currently has a score of 8.00000. 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.

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 ServiceNow, Inc. (NYSE:NOW) is -0.050035.  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 ServiceNow, Inc. NYSE:NOW is -0.05854.  This number is calculated by looking at the sum of the dividend yield plus percentage of sales repurchased and net debt repaid yield.

Price Index

We can now take a quick look at some historical stock price index data. ServiceNow, Inc. (NYSE:NOW) presently has a 10 month price index of 1.54556. The price index is calculated by dividing the current share price by the share price ten months ago. A ratio over one indicates an increase in share price over the period. A ratio lower than one shows that the price has decreased over that time period. Looking at some alternate time periods, the 12 month price index is 1.35911, the 24 month is 2.37707, and the 36 month is 3.61509. Narrowing in a bit closer, the 5 month price index is 1.08842, the 3 month is 0.97814, and the 1 month is currently 0.88513.

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DuPont de Nemours, Inc. (NYSE:DD) has a current Magic Formula rank of 403. The formula which was developed by hedge fund manager Joel Greenblatt, is intended 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.

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The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of DuPont de Nemours, Inc. (NYSE:DD) is 21.  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 DuPont de Nemours, Inc. (NYSE:DD) is 14.

Shifting gears, we can see that DuPont de Nemours, Inc. (NYSE:DD) has a Q.i. Value of 15.00000. The Q.i. Value ranks companies using four ratios. These ratios consist of EBITDA Yield, FCF Yield, Liquidity, and Earnings Yield. The purpose of the Q.i. Value is to help identify companies that are the most undervalued. Typically, the lower the value, the more undervalued the company tends to be.

Watching some historical volatility numbers on shares of DuPont de Nemours, Inc. (NYSE:DD), we can see that the 12 month volatility is presently 48.016600. The 6 month volatility is 67.212600, and the 3 month is spotted at 44.531200. Following volatility data can help measure how much the stock price has fluctuated over the specified time period. Although past volatility action may help project future stock volatility, it may also be vastly different when taking into account other factors that may be driving price action during the measured time period. 

Investors may be interested in viewing the Gross Margin score on shares of DuPont de Nemours, Inc. (NYSE:DD). The name currently has a score of 5.00000. 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.

At the time of writing, DuPont de Nemours, Inc. (NYSE:DD) has a Piotroski F-Score of 5. The F-Score may help discover companies with strengthening balance sheets. The score may also be used to spot the weak performers. Joseph Piotroski developed the F-Score which employs nine different variables based on the company financial statement. A single point is assigned to each test that a stock passes. Typically, a stock scoring an 8 or 9 would be seen as strong. On the other end, a stock with a score from 0-2 would be viewed as weak.

Volatility

Stock volatility is a percentage that indicates whether a stock is a desirable purchase.  Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year.  The Volatility 12m of DuPont de Nemours, Inc. (NYSE:DD) is 48.016600.  This is calculated by taking weekly log normal returns and standard deviation of the share price over one year annualized.  The lower the number, a company is thought to have low volatility.  The Volatility 3m is a similar percentage determined by the daily log normal returns and standard deviation of the share price over 3 months.  The Volatility 3m of DuPont de Nemours, Inc. (NYSE:DD) is 44.531200.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 67.212600.

Return on Invested Capital (ROIC), ROIC Quality, ROIC 5 Year Average

The Return on Invested Capital (aka ROIC) for DuPont de Nemours, Inc. (NYSE:DD) is 0.615758. 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 DuPont de Nemours, Inc. (NYSE:DD) is 3.180813. 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 DuPont de Nemours, Inc. (NYSE:DD) is 0.122047.

There are many different tools to determine whether a company is profitable or not.  One of the most popular ratios is the “Return on Assets” (aka ROA).  This score indicates how profitable a company is relative to its total assets.  The Return on Assets for DuPont de Nemours, Inc. (NYSE:DD) is 0.004948.  This number is calculated by dividing net income after tax by the company’s total assets.  A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

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