Houghton Mifflin Harcourt Company (NasdaqGS:HMHC), Japan Best Rescue System Co.,Ltd. (TSE:2453) MF Ranks Stand At a Turning Point

The Current Ratio of Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 1.45.  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 does not 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. It is wise to compare a company’s current ratio to that of other companies in the same industry. It would also be wise to look at the trend of the current ratio for a given company over a given time period.

Another useful indicator to assist in detmining rank is the ERP5 Rank. This 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 Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 13437. The lower the ERP5 rank, the more undervalued a company is thought to be.

Looking further, 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 Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 13492. 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”.

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 Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 6. 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.

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 Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 11.00000. 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.

The Price Index is a ratio that indicates the return of a share price over a past period. The price index of Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) for last month was 0.80363. This is calculated by taking the current share price and dividing by the share price one month ago. If the ratio is greater than 1, then that means there has been an increase in price over the month.

If the ratio is less than 1, then we can determine that there has been a decrease in price. Similarly, investors look up the share price over 12 month periods. The Price Index 12m for Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 0.93775.

Valuation

Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) presently has a current ratio of 1.45. 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 Value Composite One (VC1) is a method that investors use to determine a company’s value. The VC1 of Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 32. 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 Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 40.

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 Houghton Mifflin Harcourt Company NasdaqGS:HMHC is 1.139347. 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 Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 7.619151. 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 Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is -9.299078. This ratio is found by taking the current share price and dividing by earnings per share.

FCF
The FCF Yield 5yr Average is calculated by taking the five year average free cash flow of a company, and dividing it by the current enterprise value. Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The average FCF of a company is determined by looking at the cash generated by operations of the company. The Free Cash Flow Yield 5 Year Average of Houghton Mifflin Harcourt Company (NasdaqGS:HMHC) is 0.110017.

In taking a look at some key indicators for Japan Best Rescue System Co.,Ltd. (TSE:2453), we note that the current Book to Market value for the firm is at 0.124534. 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. 

Price Index/Share Movement

We can now take a quick look at some historical stock price index data. Japan Best Rescue System Co.,Ltd. (TSE:2453) presently has a 10 month price index of 1.79907. 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 1.52854, the 24 month is 5.98467, and the 36 month is 6.70085. Narrowing in a bit closer, the 5 month price index is 1.35979, the 3 month is 1.12967, and the 1 month is currently 1.14222.

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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 71. 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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 63.

Japan Best Rescue System Co.,Ltd. (TSE:2453) currently has a Montier C-score of -1.00000. 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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 7503. 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”.

Japan Best Rescue System Co.,Ltd. (TSE:2453) has an M-score Beneish of -999.000000. 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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 10572. 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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 55.875900. 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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 57.735300. The Volatility 6m is the same, except measured over the course of six months. The Volatility 6m is 66.863200.

We can now take a quick look at some historical stock price index data. Japan Best Rescue System Co.,Ltd. (TSE:2453) presently has a 10 month price index of 1.79907. 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 1.52854, the 24 month is 5.98467, and the 36 month is 6.70085. Narrowing in a bit closer, the 5 month price index is 1.35979, the 3 month is 1.12967, and the 1 month is currently 1.14222.

ROIC

The Return on Invested Capital (aka ROIC) for Japan Best Rescue System Co.,Ltd. (TSE:2453) is 0.154230. 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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 5.182743. 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 Japan Best Rescue System Co.,Ltd. (TSE:2453) is 0.069251.

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

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