Digging into the Technicals On ARRIS International plc (NasdaqGS:ARRS), Proofpoint, Inc. (NasdaqGM:PFPT)

In taking a look at some key indicators for ARRIS International plc (NasdaqGS:ARRS), we note that the current Book to Market value for the firm is at 0.542907. The Book to Market or BTM is calculated as Market Value (or Stock Price)/Book Value. Investors often look for shares with high Book to Market value as this could indicate that the equity is priced below market value and underpriced.

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.

Investing in the stock market often requires individuals to gauge how much risk they are willing to take on for potential reward. Piling on too much risk can put the investor out of their comfort zone. On the flip side, taking on too little risk may not provide the opportunity to receive enough returns to achieve previously stated goals. Finding that perfect balance may come with some first-hand experience that includes some trial and error. 

Additional Tools

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 ARRIS International plc (NasdaqGS:ARRS) is 0.014918.  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.

Looking at some ROIC (Return on Invested Capital) numbers, ARRIS International plc (NasdaqGS:ARRS)’s ROIC is 0.140563. The ROIC 5 year average is 0.167536 and the ROIC Quality ratio is 5.039232. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits. 

In terms of EBITDA Yield, ARRIS International plc (NasdaqGS:ARRS) currently has a value of 0.093697. This value is derived by dividing EBITDA by Enterprise Value.

The Current Ratio of ARRIS International plc (NasdaqGS:ARRS) is 1.58. The Current Ratio is used by investors to determine whether a company can pay short term and long term debts. The current ratio looks at all the liquid and non-liquid assets compared to the company’s total current liabilities. A high current ratio indicates that the company might have trouble managing their working capital. A low current ratio (when the current liabilities are higher than the current assets) indicates that the company may have trouble paying their short term obligations.

The Leverage Ratio of ARRIS International plc (NasdaqGS:ARRS) is 0.283069. 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.

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 ARRIS International plc (NasdaqGS:ARRS) is 9. 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.

Checking in on some valuation rankings, ARRIS International plc (NasdaqGS:ARRS) has a Value Composite score of 33. 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 23.

Volatility/C Score

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 ARRIS International plc (NasdaqGS:ARRS) is 28.649000.  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 ARRIS International plc (NasdaqGS:ARRS) is 9.382500.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 27.843900.

ARRIS International plc (NasdaqGS:ARRS) currently has a Montier C-score of 1.00000. This indicator was developed by James Montier in an attempt to identify firms that were cooking the books in order to appear better on paper. The score ranges from zero to six where a 0 would indicate no evidence of book cooking, and a 6 would indicate a high likelihood. A C-score of -1 would indicate that there is not enough information available to calculate the score. Montier used six inputs in the calculation. These inputs included a growing difference between net income and cash flow from operations, increasing receivable days, growing day’s sales of inventory, increasing other current assets, decrease in depreciation relative to gross property plant and equipment, and high total asset growth.

There is no shortage of financial news and opinions as we live in the age of the 24 hour news cycle. Headlines and expert opinions seem to be around every corner when dealing with the stock market. Trying to keep up with all the swirling news can make ones head spin. Even though there may be some significant news mixed in, a lot of the headlines may not be worth paying much attention to. Figuring out what information is useful may take some time for the investor to figure out. Once the filter is in place, investors may find it much easier to focus on the important data. Making investment decisions solely based on news headlines may end up causing the portfolio to suffer down the line. 

Here we will take a look at several key ratios for Proofpoint, Inc. (NasdaqGM:PFPT), starting with the Book to Market (BTM) ratio. Value investors seek stocks with high BTMs for their portfolios.  The ratio is a comparison of the firm’s net asset value per share to it’s current price.  This is helpful in determining how the market values the company compared to it’s actual worth.  The Book to Market value of Proofpoint, Inc. currently stands at 0.081607.

When it comes to equity investing, being too confident may be just as detrimental as not being confident enough. Many investors may think they are making all the right moves when the markets are riding high. This may be the case, but sometimes it might be good fortune. Finding confidence to make trades in down market environments may make the difference between a good portfolio and a great portfolio. It can also be quite easy to confuse skill with a long-term bull market. Many bad decisions may still get rewarded when the market keeps heading higher. On the other end of the spectrum, having too much self-doubt may leave an investor with way too many what ifs. Managing confidence in the markets may play a pivotal role when making tough investing decisions. Finding that perfect balance between the needed gusto and the correct amount of caution may help ease the burden moving forward in the equity market.

In terms of EBITDA Yield, Proofpoint, Inc. (NasdaqGM:PFPT) currently has a value of -0.004496. This value is derived by dividing EBITDA by Enterprise Value.

Proofpoint, Inc. (NasdaqGM:PFPT) presently has a current ratio of 0.81. 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 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 Proofpoint, Inc. NasdaqGM:PFPT is 12.253856.  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 Proofpoint, Inc. (NasdaqGM:PFPT) is 33.995789.  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 Proofpoint, Inc. (NasdaqGM:PFPT) is -60.535698. This ratio is found by taking the current share price and dividing by earnings per share.

Looking at some ROIC (Return on Invested Capital) numbers, Proofpoint, Inc. (NasdaqGM:PFPT)’s ROIC is -0.685404. The ROIC 5 year average is -0.315255 and the ROIC Quality ratio is -0.826869. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits. 

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 Proofpoint, Inc. (NasdaqGM:PFPT) is 1.017352.  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 Proofpoint, Inc. (NasdaqGM:PFPT) is 1.354220.  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 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 Proofpoint, Inc. (NasdaqGM:PFPT) is 45.00000.  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.

At the time of writing, Proofpoint, Inc. (NasdaqGM:PFPT) has a Piotroski F-Score of 4. 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.

Shifting gears, we can see that Proofpoint, Inc. (NasdaqGM:PFPT) has a Q.i. Value of 56.00000. 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.

Watching some historical volatility numbers on shares of Proofpoint, Inc. (NasdaqGM:PFPT), we can see that the 12 month volatility is presently 39.450500. The 6 month volatility is 46.226200, and the 3 month is spotted at 38.186100. 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.

There is no easy answer when attempting to address the tough question of how to best approach the equity market, especially when facing a turbulent investing climate. There are many different schools of thought when it comes to stock trading. Investors may have to first gauge their appetite for risk in order to build a solid platform on which to construct a legitimate strategy. The wealth of available information has made the road a bit smoother to travel for amateur investors. Making the transition to the next level is most likely on the minds of many dedicated investors. Tracking technicals and fundamentals may also help provide a roadmap to help separate the contenders from the pretenders. As we head into the second half of the year, it remains to be seen which way the market will lean. Investors may have to do all the necessary homework in order to find stocks that will thrive under any market conditions. 

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