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Could Range Resources Corp. (NYSE: RRC) head down?

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Today, we are going to evaluate Range Resources Corporation (RRC) so as to get clarity on this organization and its current standing from a fundamental perspective. In that process, we hope to give some insight into what this stock may offer as an investment opportunity for prospective investors. To accomplish that, we will be moving from top to bottom in our evaluation. As such, our first point of focus will be a look at the company from a revenue perspective.

Over the course of the prior fiscal quarter, the company saw sales of 561.92M[3. Sales mrq]. That number needs context to grant us any insight: by comparison, we can see an overall change in revenues, on a quarterly year/year basis, of 0.53%. However, in sequential terms, the situation looks a little different, with sales decline by -0.09% from quarter to quarter. While revenue analysis gives us a strong sense of changing demand trends in the company’s end market, and how the company is executing in terms of its relationship with potential customers, real shareholder value is only truly created by profitability. With this in mind, we turn to the company’s bottom line data.

Range Resources Corporation (RRC) may offer even more interest as an object of analysis if we zoom in a bit more and look at some of its core trends. For example, the cost of selling goods last quarter was 451.06M, which yielded a gross basic income of 110.85M.

The company’s recently reported data shows total diluted outstanding shares of 245.34M, which implies an overall EPS (or earnings per share) of 0.28. To give the reader a little context that number compares to an analyst consensus expected value of 0.15 in next fiscal quarter EPS data. Next, let’s look ahead at coming performance based on what analysts are projecting for the company more generally, before closing with a survey of the balance sheet and cash flow. Among analysts, the average recommendation for this stock is Overweight. That number represents the product of the work of 35 analysts. It is important to consider the views of the analyst community even though we don’t suggest taking analyst recommendations as face value plans for action in a portfolio. The primary value of looking at analyst opinions is in knowing what sort of views may already be priced into the stock.

If we look at price targets, we can see that analysts currently have things pegged around an average target at about 29.62. When we look at next year, we can things shake out in terms of estimates of a fiscal year forecast to bring about 0.66 in terms of total EPS. That works out to a median P/E ratio basis valuation of right around 29.58 times earnings.

So far, we have covered how the company is doing on both the top and bottom line, as well as what professional analysts believe about its core trends and operational and financial performance going forward. However, we would be remiss if we did not also take a quick look at cash flows and the company’s balance sheet to round out our perspective on the name.

The last thing we like to look at for a company like is the balance sheet. That really is the heart of the company’s ability to weather tough times, and the basis for an experienced investor’s sense of the real downside risk inherent in a stock. So, as we like to see, the balance sheet is the seat of faith for the market. In this case, for RRC, the company has about 520,000 in cash in the bank, according to its most recent reports. That cash sits opposite about – in total current liabilities on the ledger. But balance sheet health isn’t a fixed idea. Trends matter. And the best way to understand real risk, particularly where debt levels are concerned, is to trace a line connecting the past with the future. In this case, the company’s debt has been falling. The company also has 11.62B in total assets, balanced by 5.96B in total liabilities. That should put things into perspective quite a bit more in terms of how one can justify the current market cap of the stock.

Finally, we want to take a peek at cash flows. In this case, the company saw free cash flowing at (108.11M) last quarter, which represents a net change for the quarter in cash levels of (25,000). That works out to about 185.47M in terms of cash flow on a net operating basis.

This is certainly an interesting story and one we plan to check back on soon.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

I graduated from UCSD with a degree in Journalism. With more than 5 years of experience in freelance journalism, my forte is covering stock fundamentals.

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Ford Motor Company (F) finding value is an unloved sector

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Our task today will be to comprehensively evaluate recent data for Ford Motor Company (F) to determine whether or not we have something approaching a “value” in the market.

In the most basic sense, the “value investing” methodology really has its roots in the college textbook “Security Analysis”, which was published six decades ago by Graham and Dodd. But today, the term “value investing” is generally applied to any approach that focuses first and foremost on the concept of valuation, seeking out viable companies that are “cheap” based on various measures.

In this case, the company’s forward price-to-earnings ratio — perhaps the most common default measure of valuation — is currently at 7.92. That’s based on estimates looking for earnings of 0.48 coming up the pike in the company’s next financial report card.

That said, we all know that the forward data on a stock like this requires faith in those making projections: the analysts. Currently, the forward projections are driven by a group of 20 analysts. And, naturally, no one knows if those 20 folks are way off base for some reason. It’s happened before. That’s why some investing legends only trust the trailing earnings data.

In this case, that valuation ration is sitting right at 12.67.

However, to get a real sense of how this measures up, we will need to dig deeper. Benjamin Graham, the legendary value investor and one of the authors of the seminal text mentioned above, commonly relied on a simple formula for more aggressive investments: Current assets should be at least 1½ times current liabilities, debt should not be more than 110% of net current assets, there should be some level of dividend payments, and the Price-to-book-value ratio should be less than 120% of net tangible assets.

With that in mind, let’s see how Ford Motor Company (F) stacks up to this challenge.

First off, the company’s current ratio (the ration of current assets to current liabilities) is sitting at 1.20. Remember, according to Graham, that should be at least 1.5. Next, we can see debt-to-equity at 451.22. In addition, if you search the company’s recent dividend rate, you will get 0.60. How about price-to-book ratio? Right now, it clocks in at 1.48.

That should speak to what Graham might say if he came across this stock at its current price. But there are certainly other factors involved in the concept of value in today’s market that should be appreciated.

For example, Ford Motor Company (F) has managed to generate a return on its assets of 0.80%. That has been achieved through operating margins of 2.03%. Naturally, in the most basic sense, the concept of value is rooted in an ability to generate returns on invested capital. It is fundamentally about gaining access to the machine that has demonstrated its capability to generate those returns, and to do so for a price that is beneath what it is truly worth.

Perhaps the final measure that speaks to this idea is what investors currently have to pay for the company’s sales. In this case, the company’s price-to-sales ratio currently clocks in at 0.31.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Castle Brands Inc. (ROX) beta you simply cannot ignore

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Our task today will be to comprehensively evaluate recent data for Castle Brands Inc. (ROX) to determine whether or not we have something approaching a “value” in the market.

In the most basic sense, the “value investing” methodology really has its roots in the college textbook “Security Analysis”, which was published six decades ago by Graham and Dodd. But today, the term “value investing” is generally applied to any approach that focuses first and foremost on the concept of valuation, seeking out viable companies that are “cheap” based on various measures.

In this case, the company’s forward price-to-earnings ratio — perhaps the most common default measure of valuation — is currently at 61.00. That’s based on estimates looking for earnings of 0 coming up the pike in the company’s next financial report card.

That said, we all know that the forward data on a stock like this requires faith in those making projections: the analysts. Currently, the forward projections are driven by a group of 1 analysts. And, naturally, no one knows if those 1 folks are way off base for some reason. It’s happened before. That’s why some investing legends only trust the trailing earnings data.

In this case, that valuation ration is sitting right at -203.33.

However, to get a real sense of how this measures up, we will need to dig deeper. Benjamin Graham, the legendary value investor and one of the authors of the seminal text mentioned above, commonly relied on a simple formula for more aggressive investments: Current assets should be at least 1½ times current liabilities, debt should not be more than 110% of net current assets, there should be some level of dividend payments, and the Price-to-book-value ratio should be less than 120% of net tangible assets.

With that in mind, let’s see how Castle Brands Inc stacks up to this challenge.

First off, the company’s current ratio (the ration of current assets to current liabilities) is sitting at 3.06. Remember, according to Graham, that should be at least 1.5. Next, we can see debt-to-equity at 822.46. In addition, if you search the company’s recent dividend rate, you will get N/A. How about price-to-book ratio? Right now, it clocks in at 110.91.

That should speak to what Graham might say if he came across this stock at its current price. But there are certainly other factors involved in the concept of value in today’s market that should be appreciated.

For example, Castle Brands Inc. (ROX) has managed to generate a return on its assets of 2.48%. That has been achieved through operating margins of 2.87%. Naturally, in the most basic sense, the concept of value is rooted in an ability to generate returns on invested capital. It is fundamentally about gaining access to the machine that has demonstrated its capability to generate those returns, and to do so for a price that is beneath what it is truly worth.

Perhaps the final measure that speaks to this idea is what investors currently have to pay for the company’s sales. In this case, the company’s price-to-sales ratio currently clocks in at 2.72.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Tesla, Inc. (TSLA) beta you simply cannot ignore

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Our task today will be to comprehensively evaluate recent data for Tesla, Inc. (TSLA) to determine whether or not we have something approaching a “value” in the market.

In the most basic sense, the “value investing” methodology really has its roots in the college textbook “Security Analysis”, which was published six decades ago by Graham and Dodd. But today, the term “value investing” is generally applied to any approach that focuses first and foremost on the concept of valuation, seeking out viable companies that are “cheap” based on various measures.

In this case, the company’s forward price-to-earnings ratio — perhaps the most common default measure of valuation — is currently at -171.95. That’s based on estimates looking for earnings of -1.7 coming up the pike in the company’s next financial report card.

That said, we all know that the forward data on a stock like this requires faith in those making projections: the analysts. Currently, the forward projections are driven by a group of 19 analysts. And, naturally, no one knows if those 19 folks are way off base for some reason. It’s happened before. That’s why some investing legends only trust the trailing earnings data.

In this case, that valuation ration is sitting right at -69.46.

However, to get a real sense of how this measures up, we will need to dig deeper. Benjamin Graham, the legendary value investor and one of the authors of the seminal text mentioned above, commonly relied on a simple formula for more aggressive investments: Current assets should be at least 1½ times current liabilities, debt should not be more than 110% of net current assets, there should be some level of dividend payments, and the Price-to-book-value ratio should be less than 120% of net tangible assets.

With that in mind, let’s see how Tesla, Inc stacks up to this challenge.

First off, the company’s current ratio (the ration of current assets to current liabilities) is sitting at 0.97. Remember, according to Graham, that should be at least 1.5. Next, we can see debt-to-equity at 145.20. In addition, if you search the company’s recent dividend rate, you will get N/A. How about price-to-book ratio? Right now, it clocks in at 11.01.

That should speak to what Graham might say if he came across this stock at its current price. But there are certainly other factors involved in the concept of value in today’s market that should be appreciated.

For example, Tesla, Inc. (TSLA) has managed to generate a return on its assets of -2.10%. That has been achieved through operating margins of -6.33%. Naturally, in the most basic sense, the concept of value is rooted in an ability to generate returns on invested capital. It is fundamentally about gaining access to the machine that has demonstrated its capability to generate those returns, and to do so for a price that is beneath what it is truly worth.

Perhaps the final measure that speaks to this idea is what investors currently have to pay for the company’s sales. In this case, the company’s price-to-sales ratio currently clocks in at 5.59.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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