How are General Mills, Inc. (NYSE:GIS) and S&P Global Inc. (NYSE:SPGI)’s Margins Stacking Up?

In trying to determine the current valuation of General Mills, Inc. (NYSE:GIS) shares, we note that the Book to Market ratio of the shares stands at 0.234866. It’s commonly accepted that a Book to Market ratio greater than one indicates that the shares might be undervalued.  The book to market ratio has some limitations in certain industries however where intangible assets (such as knowledge) often are not represented on a balance sheet. The ratio is calculated by dividing the market price per share by book value per share.

A ratio of a publicly-traded company’s book value to its market value. That is, the BTM is a comparison of a company’s net asset value per share to its share price. This is a useful tool to help determine how the market prices a company relative to its actual worth. A ratio greater than one indicates an undervalued company, while a ratio less than one means a company is overvalued. Value managers seek out companies with high BTMs for their portfolios.

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

The Return on Invested Capital (aka ROIC) for General Mills, Inc. (NYSE:GIS) is 0.561998. 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 General Mills, Inc. (NYSE:GIS) is 6.037621. 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 General Mills, Inc. (NYSE:GIS) is 0.593633.

Leverage Ratio

The Leverage Ratio of General Mills, Inc. (NYSE:GIS) is 0.580327. 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.

MF Rank

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 General Mills, Inc. (NYSE:GIS) is 2795. 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”.

Piotroski F-Score

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 General Mills, Inc. (NYSE:GIS) 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.

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 General Mills, Inc. (NYSE:GIS) is 0.091544. 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.

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 General Mills, Inc. (NYSE:GIS) is 26.901700. 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 General Mills, Inc. (NYSE:GIS) is 20.852100. The Volatility 6m is the same, except measured over the course of six months. The Volatility 6m is 26.082500.

S&P Global Inc. (NYSE:SPGI) has a Q.i. Value of 38.00000. 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 stocks that are the most undervalued. Typically, the lower the number, the more undervalued the company tends to be.

The EBITDA Yield is a great way to determine a company’s profitability. 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 for S&P Global Inc. (NYSE:SPGI) is 0.057109.

The Earnings to Price yield of S&P Global Inc. (NYSE:SPGI) is 0.039068. 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 S&P Global Inc. NYSE:SPGI is 0.053394. 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 S&P Global Inc. is 0.037792.

FCF Yield 5yr Avg

The FCF Yield 5yr Average is calculated by taking the five year average free cash flow of a company, and dividing it by the current 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 average FCF of a company is determined by looking at the cash generated by operations of the company. The Free Cash Flow Yield 5 Year Average of S&P Global Inc. (NYSE:SPGI) is 0.018014.

Currently, S&P Global Inc. (NYSE:SPGI)’s ROIC is1.773054. The ROIC 5 year average is 1.839389 and the ROIC Quality ratio is 3.343666. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a company is at turning capital into profits. ROIC may be a good measure to view when examining whether or not a company is able to invest wisely. ROIC may also be an important metric for the value investor who is trying to determine the company’s moat. S&P Global Inc. (NYSE:SPGI) has a current Value Composite Score of 56. Using a scale from 0 to 100, a lower score would represent an undervalued company and a higher score would indicate an expensive or overvalued company. This ranking was developed by James O’Shaughnessy using six different valuation ratios including price to book value, price to sales, EBITDA to EV, price to cash flow, price to earnings, and shareholder yield.

Price to book, Price to cash flow, Price to earnings

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 S&P Global Inc. NYSE:SPGI is 79.805350. 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 S&P Global Inc. (NYSE:SPGI) is 24.281860. 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 S&P Global Inc. (NYSE:SPGI) is 25.596404. This ratio is found by taking the current share price and dividing by earnings per share.

Value Comp 1 / Value Comp 2

The Value Composite One (VC1) is a method that investors use to determine a company’s value. The VC1 of S&P Global Inc. (NYSE:SPGI) is 66. 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 S&P Global Inc. (NYSE:SPGI) is 56.