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What does PEG Slater mean?

Jim Slater defined his own version of the Price Earnings Growth (PEG) ratio in the book 'The Zulu Principle. This version uses both forecast rolling PE ratio and forecast eps growth rates, and incorporates the additional restriction that a companies must have 4 consecutive growth periods, albeit potentially including two forecast periods.

Stockopedia explains PEG Slater...

The PEG gives a rule of thumb as to whether a company is good value for the level of earnings growth. A PEG ratio of 1 is supposed to indicate that the stock is fairly priced (earnings growth rate equivalent to PE Ratio). A ratio less than .5 is considered to be excellent.

Critics accuse Slater's PEG method of double counting the earnings growth of the company in question. Using a forward looking P/E in the numerator already takes into account the earnings growth rate of the company. Most analysts use the other method for calculating the PEG Ratio.

What does P/E Rolling 1y mean?

The Price to Earnings Ratio (also called the PE ratio) is the primary valuation ratio used by most equity investors. It is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. A high P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with a lower P/E ratio. The P/E ratio can be seen as being expressed in years, in the sense that it shows the number of years of earnings which would be required to pay back the purchase price, ignoring inflation.

This is a rolling ratio which means that it weights FY1 and FY2 forecasts depending on how far a company is through its reporting period. This makes apples and oranges more comparable - otherwise you might be comparing one company on a forecast P/E for a company reporting tomorrow with a company reporting in 11 months!

Stockopedia explains P/E Rolling 1y...

Investors have a tendency to overreact becoming enamoured with glamour stocks (pushing their PE too high) while becoming disenchanted with value stocks (pushing their PE too low). Research has shown that low P/E ratio stocks tend to outperform high PE stocks in the long run. On the other hand, there are many investors who believe that you should 'pay up for quality' in the same way people pay for jewellery - the best growth stocks therefore rarely trade for cheap PE multiples.

Unlike the EV/EBITDA multiple which is capital structure-neutral, the price-to-earnings ratio reflects the capital structure of the company in question. The reciprocal of the P/E ratio is known as the earnings yield.

What does EPS Gwth % Rolling 1y mean?

This ratio measure the percentage change in EPS between successive periods. It is a rolling 1 year forecast earnings number based on the consensus of analyst's estimates. It weights this current year and next year's earnings forecasts depending on how far a company is through in its fiscal year.

See this article for further explanation of what we mean by rolling.

Stockopedia explains EPS Gwth % Rolling 1y...

One of the key contributing factors to stock price appreciation is the forecast rate of earnings growth. Accelerating earnings growth and broker forecast upgrades have also been cited by many investment experts such as Bill O'Neil as critical factors in their investment models. This figure should be viewed in tandem with historic EPS Growth in the financial summary section and the trend in forecast data in the broker section.

What does RS 1y mean?

1 year relative Strength measures a stock's price change over the last year relative to the price change of a market index (e.g the FTSE All Share). It shows the relative outperformance or underperformance of the stock in that timeframe.

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p> This figure is sourced from Thomson Reuters. It is calculated dividing the price change of a stock by the price change of the index for the same time period. e.g. A stock falling by 20% versus an index rising 20% would lead to a Relative strength calculation of 100 * ( 80/120 - 1) = -33%

Stockopedia explains RS 1y...

Research indicates that relative strength is a negative signal in the near-term but generally a positive indicator in the medium (6-24 months).

A study by Hancock found a momentum-based strategy outperformed a broad universe of U.S. stocks by nearly 4% per year from 1927-2009. Research has shown that momentum is particularly beneficial when combined with a value style because the two are negatively correlated. Moskowitz and Grinblatt conclude that "A value-momentum combination mitigates the extreme negative return episodes a value investor will face (e.g., the tech boom of the late 1990s and early 2000 or a dismal year like 2008)".

However, momentum-based strategies have been shown to suffer badly during times of extreme market volatility such as the 2008/09 crisis.

What does ROCE % mean?

Return on Capital Employed (ROCE) compares earnings with capital invested in the company. It is similar to Return on Assets, but takes into account sources of financing. NOPAT is equal to EBIT * (1 - tax) -- the return on the capital employed should be measured in after tax terms. The main drawback of ROCE is that it measures return against the book value of assets so, as these are depreciated, the ROCE will increase even though cash flow is constant.

Stockopedia explains ROCE %...

A high double digit figure often means that the company has a defensible edge versus its competitors (e.g. a strong brand or a unique product). However, because ROCE measures return against the book value of assets, it's worth bearing aware that depreciation can flatter ROCE even though cash flow is constant. This is not the case with ROIC.

What does Mkt Cap £m mean?

Market Capitalisation is an indicator of the size of the company, specifically the total market value of the company's shares. It is calculated by multiplying the current Share Price by the current number of Shares Outstanding. This value is standardized into £ Sterling and it is updated each night (i.e. it is not 15 minute delayed data).

Stockopedia explains Mkt Cap £m...

Market Capitalisation only takes into account the value of the company's shares (equity), it ignores the amount of debt a company may have taken on and therefore isn't the best indicator of the company's size. The Enterprise Value adds the net debt to the Market Cap and is a better indicator of the minimum amount that an acquiring company may have to pay to buy the firm outright.

What does Mkt Cap £m mean?

Market Capitalisation is an indicator of the size of the company, specifically the total market value of the company's shares. It is calculated by multiplying the current Share Price by the current number of Shares Outstanding. This value is standardized into £ Sterling and it is updated each night (i.e. it is not 15 minute delayed data).

Stockopedia explains Mkt Cap £m...

Market Capitalisation only takes into account the value of the company's shares (equity), it ignores the amount of debt a company may have taken on and therefore isn't the best indicator of the company's size. The Enterprise Value adds the net debt to the Market Cap and is a better indicator of the minimum amount that an acquiring company may have to pay to buy the firm outright.