Earning a Solid FCF Score, Are Cummins Inc. (NYSE:CMI) and Ulta Beauty, Inc. (NasdaqGS:ULTA) Signals Pointing to a Buy?

Here we will take a glance at the Gross Margin Score of Cummins Inc. (NYSE:CMI) shares. The stock currently has a score of 16.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score works 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 score of 16.00000 for Cummins Inc. indicates that a further look into the shares is needed.

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 Cummins Inc. (NYSE:CMI) is 0.241060. 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 Cummins Inc. (NYSE:CMI) is 0.837915. 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 Cummins Inc. (NYSE:CMI) is 0.231983. 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 Cummins Inc. (NYSE:CMI) is 13.816918. 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 Cummins Inc. (NYSE:CMI) is 0.185245.

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 Cummins Inc. (NYSE:CMI) is 0.064633. 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 Cummins Inc. NYSE:CMI is 0.05985. 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 Cummins Inc. (NYSE:CMI) is 29. 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 Cummins Inc. (NYSE:CMI) is 20.

Key Ratios

Cummins Inc. (NYSE:CMI) presently has a current ratio of 1.54. The current ratio, also known as the working capital ratio, is a liquidity ratio that displays the proportion of current assets of a business relative to the current liabilities. The ratio is simply calculated by dividing current liabilities by current assets. The ratio may be used to provide an idea of the ability of a certain company to pay back its liabilities with assets. Typically, the higher the current ratio the better, as the company may be more capable of paying back its obligations.

Cummins Inc. (NYSE:CMI)’s Leverage Ratio was recently noted as 0.133344. This ratio is calculated by dividing total debt by total assets plus total assets previous year, divided by two. The leverage of a company is relative to the amount of debt on the balance sheet. This ratio is often viewed as one measure of the financial health of a firm.

The Price to book ratio is the current share price of a company divided by the book value per share. The Price to Book ratio for Cummins Inc. NYSE:CMI is 3.355585. A lower price to book ratio indicates that the stock might be undervalued. Similarly, Price to cash flow ratio is another helpful ratio in determining a company’s value. The Price to Cash Flow for Cummins Inc. (NYSE:CMI) is 10.368731. This ratio is calculated by dividing the market value of a company by cash from operating activities. Additionally, the price to earnings ratio is another popular way for analysts and investors to determine a company’s profitability. The price to earnings ratio for Cummins Inc. (NYSE:CMI) is 11.516507. This ratio is found by taking the current share price and dividing by earnings per share.

Taking a look at some historical volatility numbers on Ulta Beauty, Inc. (NasdaqGS:ULTA), we can see that the twelve month volatility is currently 35.118800. The 6 month volatility is 34.611100, and the three month is noted at 26.824000. Following volatility data can help calculate 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 movement during the measured timeframe.

The Value Composite One (VC1) is a method that investors use to determine a company’s value. The VC1 of Ulta Beauty, Inc. (NasdaqGS:ULTA) is 58. 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 Ulta Beauty, Inc. (NasdaqGS:ULTA) is 50.

Shifting gears, we can see that Ulta Beauty, Inc. (NasdaqGS:ULTA) has a Q.i. Value of 42.00000. 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.

Investors may be interested in viewing the Gross Margin score on shares of Ulta Beauty, Inc. (NasdaqGS:ULTA). The name currently has a score of 14.00000. 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, Ulta Beauty, Inc. (NasdaqGS:ULTA) has a Piotroski F-Score of 7. 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.

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

The Return on Invested Capital (aka ROIC) for Ulta Beauty, Inc. (NasdaqGS:ULTA) is 0.409658. 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 Ulta Beauty, Inc. (NasdaqGS:ULTA) is 7.973816. 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 Ulta Beauty, Inc. (NasdaqGS:ULTA) is 0.392681.

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 Ulta Beauty, Inc. (NasdaqGS:ULTA) is 0.226411. 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.