TriCo Bancshares (TCBK) PI of 1.089394 Puts Quant Investors on Notice

TriCo Bancshares (TCBK) at present has a 6 month price index of 0.973183. The price index is determined by dividing the current stock price by the stock price six months ago. A ratio over one illustrates an increase in stock price over the season. A ratio lower than one shows that the price has decreased over that time season. Studying at some other time periods, the 12 month price index is 1.037938 and the five year is 1.720381. Narrowing in a bit closer, the 3 month is 1.041212, and the 1 month is currently 1.089394.

Individual investors might be digging a little deeper into the playbook in order to create a winning plan for the remainder of the calendar year. The diligent investor typically has a portfolio that is diversified and ready to encounter any unforeseen market action. Even after creating the well-planned portfolio with expected returns, nobody can be absolutely sure that those returns will be seen. Setting realistic expectations can assist the investor from becoming discouraged if the original plan runs into a bit of a snag. Of course every investor would like to enter the equity market and see sizeable profits right off the bat. This may only be wishful thinking for investors who aren’t ready to put in the time and energy to make sure the overall strategy stays on track and the portfolio stays properly managed.

Value Composite Three (VC3) is another adaptation of O’Shaughnessy’s value composite but here he combines the factors used in VC1 with buyback yield. This factor is interesting for investors who’re viewing for stocks with the best value characteristics, but are indifferent to whether these companies pay a dividend.

VC3 is the combination of the following factors:

Price-to-Book
Price-to-Earnings
Price-to-Sales
EBITDA/EV
Price-to-Cash flow
Buyback Yield

As with the VC1 and VC2, companies are put into groups from 1 to 100 for each ratio and the individual scores are summed up. This total score is then put into groups again from 1 to 100. 1 is cheap, 100 is expensive.

The scorecard also displays variants of the VC3 where the score is determined for the selected firm compared to peer companies in the same industry, industry group or sector.

Please note that we use Book-to-Market instead of P/B since it allows a more accurate sorting compared to P/B. Stocks with a high B/M show up at the top of the list, stocks with negative B/M are at the bottom of the list. For the same reason we use Earnings-to-Price instead of Price-to-Earnings and Cash flow-to-price instead instead of Price-to-cash flow.

Also paramount is that we always make sure that companies with the same score get added to the same percentile. For stock universes where the number of stocks is less than 100, we make sure that the stocks are still allocated to percentiles from 0 to 100 instead of 0 to the total number of stocks. This is particularly relevant for the industry, industry group or sector variants where if additional filters are used, the number of stocks often drops below 100.

TriCo Bancshares (TCBK) has a VC3 of 58.

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 Yield of TriCo Bancshares (TCBK) is 0.042972. 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 5 Year FCF Yield of TriCo Bancshares (TCBK) is 0.026941. 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.

Gross Margin

Robert Novy-Marx, a professor at the university of Rochester, discovered that gross profitability – a quality factor – has as much power predicting stock returns as traditional value metrics. He found that while other quality measures had some predictive power, especially on small caps and in conjunction with value measures, gross profitability generates significant excess returns as a stand alone strategy, especially on large cap stocks.

Market watchers may also be following some quality ratios for TriCo Bancshares (TCBK). Robert Novy-Marx, a professor at the university of Rochester, discovered that gross profitability – a quality factor – has as much power predicting stock returns as traditional value metrics. He found that while other quality measures had some predictive power, especially on small caps and in conjunction with value measures, gross profitability generates significant excess returns as a stand alone strategy, especially on large cap stocks.The Gross profitability for (TCBK) is 0.007758.

Altman Z

TriCo Bancshares (TCBK) currently has an Altman Z score of -0.738037. The Z-Score for predicting bankruptcy was published in 1968 by Edward I. Altman, who was assistant professor of finance at New York University at that time. It measures the financial health of a firm based on a set of income and balance sheet values. The Altman Z-Score predicts the probability that a firm will go bankrupt within 2 years. In its initial test, the Altman Z-Score was found to be 72% accurate in predicting bankruptcy two years before the event. In a series of subsequent tests, the model was found to be approximately 80%–90% accurate in predicting bankruptcy one year before the event.

At the time of writing, TriCo Bancshares (TCBK) has a Piotroski F-Score of 4. The F-Score may assist uncover 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 firm 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 trying to determine how much exposure they are able to handle with their current stock holdings. Taking on too much exposure can put unnecessary weight on the shoulders of even the sturdiest investors. On the flip side, investors who play it too safe may be shaking their heads and wondering what might have been. Finding that delicate exposure balance can turn out to be the difference between sinking and swimming in the equity markets. It is highly paramount for investors to discern explicitly what risks they are taking when buying and selling stocks. these risks may assist avoid disaster down the line. Once the exposure is determined, investors should have an clearer go at narrowing in on finding the right stocks to add to the portfolio. 

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