Are The Quant Signals for iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) and Microsoft Corporation (NasdaqGS:MSFT)Telling a Positive Story?

Checking in on some valuation rankings, iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) has a Value Composite score of 64. 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 50.

The EBITDA Yield for iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is . This number is calculated by dividing a company’s earnings before interest, taxes, depreciation and amortization by the company’s enterprise value.  Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.  The EBITDA Yield is a great way to determine a company’s profitability.  

Watching some historical volatility numbers on shares of iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM), we can see that the 12 month volatility is presently 16.693000. The 6 month volatility is 21.207800, and the 3 month is spotted at 16.836000. 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.

The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength. The score helps determine if a company’s stock is valuable or not. The Piotroski F-Score of iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is 5. A score of nine indicates a high value stock, while a score of one indicates a low value stock. The score is calculated by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings. It is also calculated by a change in gearing or leverage, liquidity, and change in shares in issue. The score is also determined by change in gross margin and change in asset turnover.

The MF Rank (aka the Magic Formula) is a formula that pinpoints a valuable company trading at a good price. The formula is calculated by looking at companies that have a high earnings yield as well as a high return on invested capital. The MF Rank of iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is 10628. A company with a low rank is considered a good company to invest in. The Magic Formula was introduced in a book written by Joel Greenblatt, entitled, “The Little Book that Beats the Market”.

Shifting gears, we can see that iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) has a Q.i. Value of 56.00000. 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.

The C-Score is a system developed by James Montier that helps determine whether a company is involved in falsifying their financial statements. The C-Score is calculated by a variety of items, including a growing difference in net income verse cash flow, increasing days outstanding, growing days sales of inventory, increasing assets to sales, declines in depreciation, and high total asset growth. The C-Score of iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is -1.00000. The score ranges on a scale of -1 to 6. If the score is -1, then there is not enough information to determine the C-Score. If the number is at zero (0) then there is no evidence of fraudulent book cooking, whereas a number of 6 indicates a high likelihood of fraudulent activity. The C-Score assists investors in assessing the likelihood of a company cheating in the books.

Ratios

The Current Ratio of iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is 1.08. The Current Ratio is used by investors to determine whether a company can pay short term and long term debts. The current ratio looks at all the liquid and non-liquid assets compared to the company’s total current liabilities. A high current ratio indicates that the company might have trouble managing their working capital. A low current ratio (when the current liabilities are higher than the current assets) indicates that the company may have trouble paying their short term obligations.

The Leverage Ratio of iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is 0.046540. Leverage ratio is the total debt of a company divided by total assets of the current and past year divided by two. Companies take on debt to finance their day to day operations. The leverage ratio can measure how much of a company’s capital comes from debt. With this ratio, investors can better estimate how well a company will be able to pay their long and short term financial obligations.

Return on Assets

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 iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is -0.014052. 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.

The Earnings to Price yield of iShares, Inc. – iShares MSCI Emerging Markets ETF ARCA:EEM is -0.015673. This is calculated by taking the earnings per share and dividing it by the last closing share price. This is one of the most popular methods investors use to evaluate a company’s financial performance. Earnings Yield is calculated by taking the operating income or earnings before interest and taxes (EBIT) and dividing it by the Enterprise Value of the company. The Earnings Yield for iShares, Inc. – iShares MSCI Emerging Markets ETF ARCA:EEM is 0.018914. Earnings Yield helps investors measure the return on investment for a given company. Similarly, the Earnings Yield Five Year Average is the five year average operating income or EBIT divided by the current enterprise value. The Earnings Yield Five Year average for iShares, Inc. – iShares MSCI Emerging Markets ETF (ARCA:EEM) is 0.019823.

Microsoft Corporation (NasdaqGS:MSFT) has a Price to Book ratio of 9.542798. This ratio has been 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 19.059943, and a current Price to Earnings ratio of 26.211470. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.

We can now take a quick look at some historical stock price index data. Microsoft Corporation (NasdaqGS:MSFT) presently has a 10 month price index of 1.19554. 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 1.23540, the 24 month is 1.82193, and the 36 month is 2.22933. Narrowing in a bit closer, the 5 month price index is 1.07351, the 3 month is 1.11818, and the 1 month is currently 1.06311.

At the time of writing, Microsoft Corporation (NasdaqGS:MSFT) has a Piotroski F-Score of 8. 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 Microsoft Corporation (NasdaqGS:MSFT). The name currently has a score of 33.00000. 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 Q.i. Value of Microsoft Corporation is 41.00000. The Q.i. Value is a helpful tool in determining if a company is undervalued or not. The Q.i. Value is calculated using the following ratios: EBITDA Yield, Earnings Yield, FCF Yield, and Liquidity. The lower the Q.i. value, the more undervalued the company is thought to be.

The MF Rank (aka the Magic Formula) is a formula that pinpoints a valuable company trading at a good price. The formula is calculated by looking at companies that have a high earnings yield as well as a high return on invested capital. The MF Rank of Microsoft Corporation (NasdaqGS:MSFT) is 4857. A company with a low rank is considered a good company to invest in. The Magic Formula was introduced in a book written by Joel Greenblatt, entitled, “The Little Book that Beats the Market”. The ERP5 Rank is an investment tool that analysts use to discover undervalued companies. The ERP5 looks at the Price to Book ratio, Earnings Yield, ROIC and 5 year average ROIC. The ERP5 of Microsoft Corporation (NasdaqGS:MSFT) is 6829. The lower the ERP5 rank, the more undervalued a company is thought to be.

Some of the best financial predictions are formed by using a variety of financial tools. The Price Range 52 Weeks is one of the tools that investors use to determine the lowest and highest price at which a stock has traded in the previous 52 weeks. The Price Range of Microsoft Corporation (NasdaqGS:MSFT) over the past 52 weeks is 0.991000. The 52-week range can be found in the stock’s quote summary.

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 Microsoft Corporation (NasdaqGS:MSFT) is 0.172377. 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 Microsoft Corporation is 0.800239. 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.