Delving into dotdigital Group Plc (AIM:DOTD) and The Technicals Behind the 0.678818 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 dotdigital Group Plc (AIM:DOTD) is 0.678818.  Free cash flow (FCF) is the cash produced by the firm minus capital expenditure.  This cash is what a firm 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 useful gizmo 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 dotdigital Group Plc (AIM:DOTD) is 1.110255.  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.

Investors may be trying to decide if the current market environment remains bullish. It can be extremely difficult to decide when to sell, especially when data seems positive and most signs are pointing higher. Jumping in to buy stocks on a pullback may seem like a good idea, but following specific sectors may become increasingly more critical. Following long-term trends may assist the investor see the bigger picture of what has been going on with a specific stock or sector. Deciding to sell a winner after a big run can be tempting, but the underlying causes for the run may assist identify if there may indeed be more room for gains. Avoiding common investing pitfalls may take many years to master, but it may end up determining long-term success.  

Checking in on some valuation rankings, dotdigital Group Plc (AIM:DOTD) has a Value Composite score of 65. 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 firm with a score closer to 0 would be seen as undervalued, and a score closer to 100 would indicate an overvalued firm. Adding a sixth ratio, shareholder yield, we can view the Value Composite 2 score which is currently sitting at 59.

Watching some historical volatility numbers on shares of dotdigital Group Plc (AIM:DOTD), we can see that the 12 month volatility is right now 47.844200. The 6 month volatility is 35.325800, and the 3 month is spotted at 39.424100. Following volatility data can assist add up how much the stock price has fluctuated over the specified time season. Although past volatility action may assist 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 season. 

The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength.  The score helps determine if a firm’s stock is valuable or not.  The Piotroski F-Score of dotdigital Group Plc (AIM:DOTD) is 5.  A score of nine implies a high value stock, while a score of one implies a low value stock.  The score is determined by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings.  It is also determined 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 firm trading at a good price.  The formula is determined by surveying at companies that have a high earnings yield as well as a high return on invested capital.  The MF Rank of dotdigital Group Plc (AIM:DOTD) is 4523.  A firm with a low rank is considered a good firm 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 dotdigital Group Plc (AIM:DOTD) has a Q.i. Value of 40.00000. 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 assist identify companies that are the most undervalued. Typically, the lower the value, the more undervalued the firm tends to be.

The C-Score is a system developed by James Montier that helps determine whether a firm is involved in falsifying their financial statements.  The C-Score is determined by a array 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 dotdigital Group Plc (AIM:DOTD) is 5.00000.  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 implies a high likelihood of fraudulent activity. The C-Score assists investors in assessing the likelihood of a firm cheating in the books.

Ratios

The Current Ratio of dotdigital Group Plc (AIM:DOTD) is 2.74.  The Current Ratio is used by investors to determine whether a firm can pay short term and long term debts.  The current ratio looks at all the liquid and non-liquid assets compared to the firm’s total current liabilities.  A high current ratio implies that the firm might have trouble managing their working capital.  A low current ratio (when the current liabilities are higher than the current assets) implies that the firm may have trouble paying their short term obligations.

The Leverage Ratio of dotdigital Group Plc (AIM:DOTD) is 0.000121.  Leverage ratio is the total debt of a firm 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 add up how much of a firm’s capital comes from debt.  With this ratio, investors can better estimate how well a firm will be able to pay their long and short term financial obligations.

Return on Assets

There are many different tools to determine whether a firm is profitable or not. One of the most sought-after ratios is the “Return on Assets” (aka ROA). This score implies how profitable a firm is relative to its total assets. The Return on Assets for dotdigital Group Plc (AIM:DOTD) is 0.248519. This number is determined by dividing net income after tax by the firm’s total assets. A firm that manages their assets well will have a higher return, while a firm that manages their assets poorly will have a lower return.

The Earnings to Price yield of dotdigital Group Plc AIM:DOTD is 0.033079.  This is determined by taking the EPS and dividing it by the last closing equity price.  This is one of the most sought-after processes investors use to grade a firm’s financial performance.  Earnings Yield is determined by taking the operating income or earnings before interest and taxes (EBIT) and dividing it by the Enterprise Value of the firm.  The Earnings Yield for dotdigital Group Plc AIM:DOTD is 0.038180.  Earnings Yield helps investors add up the return on investment for a given firm.  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 dotdigital Group Plc (AIM:DOTD) is 0.025915.

Investors constantly have to weigh uncertainty against reward when trying to extract profits and maximum value from the equity market. Making educated investment decisions typically requires dedication, rational thinking, and self-control. Once the individual investor starts developing good habits, they can start to eliminate the bad ones that may be costing them enormous amounts of challenging earned money. Everybody is prone to make mistakes at some point, and being able to realize what contributed to the mistake can assist with corrective actions. Repeating the same mistakes over and over again in the equity market will most likely lead the investor down the wrong path. 

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