What Are The Quant Signals Telling Us About Scapa Group plc (AIM:SCPA)

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 Scapa Group plc (AIM:SCPA) stands at 3.16%.  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 Scapa Group plc (AIM:SCPA) is 1.45%.  Further, the Earnings to Price yield of Scapa Group plc AIM:SCPA is 2.48%.  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.

Quant Signals – Value Composite, C- Score, MF Rank, M-Score, ERP5

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of Scapa Group plc (AIM:SCPA) is 64.  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 Scapa Group plc (AIM:SCPA) is 68.

Scapa Group plc (AIM:SCPA) currently has a Montier C-score of 4. This indicator was developed by James Montier in an attempt to identify firms that were altering financial numbers 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 of something amiss. 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.  

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 Scapa Group plc (AIM:SCPA) is 6449.  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”.

Scapa Group plc (AIM:SCPA) has an M-score Beneish of -2.349632. This M-score model was developed by Messod Beneish in order to detect manipulation of financial statements. The score uses a combination of eight different variables. The specifics of the variables and formula can be found in the Beneish paper “The Detection of Earnings Manipulation”.

The last signal we’ll look at is the ERP5 Rank.  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 Scapa Group plc (AIM:SCPA) is 8866.  The lower the ERP5 rank, the more undervalued a company is thought to be.

Volatility/PI

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 Scapa Group plc (AIM:SCPA) is 29.8172.  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 Scapa Group plc (AIM:SCPA) is 34.6712.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 31.2733.

We can now take a quick look at some historical stock price index data. Scapa Group plc (AIM:SCPA) presently has a 10 month price index of 1.41096. 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 1.648, the 24 month is 2.32625, and the 36 month is 3.87344. Narrowing in a bit closer, the 5 month price index is 0.92515, the 3 month is 0.97672, and the 1 month is currently 1.01989.

ROIC

The Return on Invested Capital (aka ROIC) for Scapa Group plc (AIM:SCPA) is 0.215143.  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 Scapa Group plc (AIM:SCPA) is 3.61347.  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 Scapa Group plc (AIM:SCPA) is 0.104941.

Investors looking to potentially add any security to their portfolio should do all necessary research before making any investment decision. 

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