RELX PLC (LSE:REL), The Gap, Inc. (NYSE:GPS) Valuation & Quant Returns In Focus

The Return on Invested Capital (aka ROIC) Score for RELX PLC (LSE:REL) is 40.812803.  The Return on Invested Capital is a ratio that reveals whether a company is profitable or not.  It shows investors and potential 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. 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 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 RELX PLC (LSE:REL) is 5240. The lower the ERP5 rank, the more undervalued a company is thought to be.

Value
The Value Composite One (VC1) is a method that investors use to determine a company’s value. The VC1 of RELX PLC (LSE:REL) is 60. 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 RELX PLC (LSE:REL) is 49.

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.

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 RELX PLC (LSE:REL) is 18.416400. 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 RELX PLC (LSE:REL) is 24.091800. The Volatility 6m is the same, except measured over the course of six months. The Volatility 6m is 22.442700.

Keeping an eye on the all the day to day happenings in the stock market can be quite a task. Investors may need to try to focus in on the most important information when attempting to examine stocks to add to the portfolio. As earnings reports continue to roll in, investors may be taking a deeper look at some of the names that they have on their shortlist. Investors may also be taking a look at future estimates and guidance provided by companies in order to get a feel of how the stock price may be affected in the future. With the equity market still trading at super high levels, investors may be wondering how much higher some stocks in the portfolio can go. Maybe there are a few winners that look like they have peaked, and investors may have to decide whether to cash in or hold out for more gains. Maybe there are a few losers that have been underperforming and need to be cut loose.

RELX PLC (LSE:REL) has a Price to Book ratio of 14.014681. 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 16.443421, and a current Price to Earnings ratio of 22.953721. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.

Checking in on some valuation rankings, RELX PLC (LSE:REL) has a Value Composite score of 60. 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 49.

Watching some historical volatility numbers on shares of RELX PLC (LSE:REL), we can see that the 12 month volatility is presently 18.416400. The 6 month volatility is 22.442700, and the 3 month is spotted at 24.091800. 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.

Price Index
We can now take a quick look at some historical stock price index data. RELX PLC (LSE:REL) presently has a 10 month price index of 1.06076. 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 1.14728, the 24 month is 1.13580, and the 36 month is 1.40533. Narrowing in a bit closer, the 5 month price index is 1.11367, the 3 month is 1.01922, and the 1 month is currently 0.97122.

There are many different tools to determine whether a company is profitable or not. One of the most popular tools is the “Return on Assets” (aka ROA). This score indicates how profitable a firm is relative to its total assets. The Return on Assets for The Gap, Inc. (NYSE:GPS) is 0.125548. This number is calculated by dividing net income after tax by the company’s total assets. A firm that manages their assets well will have a higher return, while a company that manages their assets poorly will tend to have a lower return.

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 The Gap, Inc. (NYSE:GPS) over the past 52 weeks is 0.756000. The 52-week range can be found in the stock’s quote summary.

The Gap, Inc. (NYSE:GPS) presently has a current ratio of 1.96. 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.

The Gap, Inc. (NYSE:GPS)’s Leverage Ratio was recently noted as 0.155755. 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 or market to book ratio for The Gap, Inc. (NYSE:GPS) currently stands at 2.715046. The ratio is calculated by dividing the stock price per share by the book value per share. This ratio is used to determine how the market values the equity. A ratio of under 1 typically indicates that the shares are undervalued. A ratio over 1 indicates that the market is willing to pay more for the shares. There are often many underlying factors that come into play with the Price to Book ratio so all additional metrics should be considered as well.

FCF
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 The Gap, Inc. (NYSE:GPS) is -0.408436. 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 The Gap, Inc. (NYSE:GPS) is 0.321832. 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.

GM Score
The Gross Margin Score is calculated by looking at the Gross Margin and the overall stability of the company over the course of 8 years. The score is a number between one and one hundred (1 being best and 100 being the worst). The Gross Margin Score of The Gap, Inc. (NYSE:GPS) is 4.00000. The more stable the company, the lower the score. If a company is less stable over the course of time, they will have a higher score.

FCF
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 The Gap, Inc. (NYSE:GPS) is -0.408436. 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 The Gap, Inc. (NYSE:GPS) is 0.321832. 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 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 The Gap, Inc. (NYSE:GPS) is 7. 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 The Gap, Inc. (NYSE:GPS) is 1657. 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”.