Get the facts on a stock, fast

 

Fast Facts is a handy visual summary that allows you to instantly see if a company is worth further investigation.

Fast Facts is a quick visual summary to help you determine if a company is worth further investigation.

Once you become familiar with the role and meaning of colour in ShareAnalysis, you’ll quickly know after looking at Fast Facts if you’d like to take a closer look at a company.

Fast Facts is a handy visual summary that allows you to instantly see if a company is worth further investigation.

You can access Fast Facts anywhere in ShareAnalysis.

• Click on a company in the Stock List or Aerial View;

• Click the lightning bolt on a company’s Evaluate screen (top right corner);

• Click on a company in your portfolio’s Stocks list.

Here’s the low down what Fast Facts has to offer…

Name of the company

Name of the company

Add the stock to a portfolio

Add the stock to a portfolio

Evaluate the company in further detail

Evaluate the company in further detail

Close Fast Facts

Close Fast Facts

Key info

Key info on the stock, including its ticker code, sector and industry group in which the business operates, number of shares on issue and its market capitalisation.

Fast Facts navigation options

Check out key fundamentals

Read the latest news and announcements

Australia only – click the megaphone to read ASX Announcements.

Read a description of the business

The previous day’s closing price.

A mini Value vs Price chart that plots historical share prices (chart) and intrinsic values (line). The chart is coloured according to the company’s ShareAnalysis Score.

Future Value

The previous day’s closing price.

Future Value

ShareAnalysis estimates up to three years of intrinsic value.

1 Year is ShareAnalysis’s current year estimated value that, where available, is calculated using consensus analyst EPS and DPS data.

2 Years is ShareAnalysis’s value estimate looking two years into the future.

3 Years is ShareAnalysis’s value estimate looking three years into the future

Future Income

ShareAnalysis’s automated engine sources up to three years of forecast dividends per share. Where forecast data is not available, ShareAnalysis estimates future income.

Share Analysis Verdict

The Mainstreet Verdict translates hundreds of pieces of financial data into a concise visual interpretation of a stock.

Q: Mainstreet Quality Score (A – C)

P: Mainstreet Performance Score (1-5)

HV: Historical change in Value (historical growth)

FV: Forecast Change in Value (future growth

SM: Safety Margin

Add the stock to a portfolio

Add the stock to a portfolio

Evaluate the company in further detail

Evaluate the company in further detail

 

The Mainstreet Verdict

Get instant confirmation of a stock’s rating, growth capabilities and value status.

The Mainstreet Verdict is your one-stop-shop for a company’s Mainstreet Score (stock rating), historical growth and future growth forecasts, and safety margin.

The colours tell you straight away how the stock is rated, if its capable of delivering value to shareholders, and whether the share price offers value or not.

A summary verdict can be found in Fast FactsYou’ll see the Mainstreet Verdict on almost every screen in ShareAnalysis. Whether you’re clicking around one of the Aerial Views to open Fast Facts or evaluating companies in-depth, the Mainstreet Verdict will be there to help you determine if the stock meets your investment goals and criteria and is worth further investigation.

A summary Mainstreet Verdict can be found in Fast Facts.

To review Mainstreet’s detailed Verdict, navigate to Evaluate a company.

 

 

 

 

Quality Score (Q)

Rated A through C, Mainstreet’s Quality Score measures the financial strength of a business. The Score examines factors such as a company’s earnings and level of debt to determine the likelihood of the company suffering a major liquidity event, such as bankruptcy.

Scores update following the release of a company’s financial results (half yearly or quarterly).

Mainstreet prefers: A, B

A

B

C

ABC

Compelling quality

Green

Full height

Adequate quality

Orange

Half height

Poor quality

Red

Low height

Performance Score (P)

Rated 1 through 5, the Performance Score examines year-to-year changes in a company’s financial position and its ability to maintain that position. The Performance Score is also updated half yearly or quarterly, following the release of company results.

Mainstreet prefers: 1, 2

1

2

3

4

5

12345

Excellent business performance

Green

Full height

Good business performance

Green

Almost full height

Average business performance

Orange

Half height

Poor business performance

Red

Below half height

Very poor business performance

Red

Low height

 

Historical Change in Value (HV)

Historical Change in Value is the percentage of annual growth (or decline) in value for a company. Its calculated annually, following the release of a company’s annual results.

Mainstreet prefers: > 10%

Historical Value > 15%Historical Growth > 5%Historical Value < 5%

Historical per annum growth > 15%

Full height

Historical

per annum growth > 5%

Half height

Historical

per annum growth < 5%

Low height

 

Forecast Change in Value (FV)

Represents the forecast percentage of annual growth (or decline) in value for a company.

It can (but rarely does) change daily, as ShareAnalysis’s forecast valuations update. Review forecast valuations at a company’s Value vs Price chart. Forecast Updates shows how valuations have changed over the last 12 months.

Mainstreet prefers: > 10%

Future Value > 15%Future Value > 5%Future Growth < 5%

Future per annum growth > 15%

Full height

Future per annum growth > 5%

Half height

Future per annum growth < 5%

Low height

Safety Margin (SM)

Safety Margin is the difference between ShareAnalysis’s current intrinsic value and the market price. It represents the discount (or premium) of a company’s share price relative to the intrinsic value calculated by ShareAnalysis.

The Safety Margin may change daily as share prices move and/or ShareAnalysis’s intrinsic value estimate changes.

Mainstreet prefers: > 0%

Positive Safety MarginNegative Safety MarginSafety Margin can't be calculated

> 0%

Green

Full height

< 0%

Red

Low height

Grey

Low height

The good, bad and ugly of Mainstreet Verdicts

Think of the Verdict as traffic lights for a company – the greener the better!

The Mainstreet Verdict instantly tells you if the company’s fundamentals are good or bad, how management has performed in the past, and if future growth is forecast. The Verdict concludes with the Safety Margin – the difference between a company’s share price and its intrinsic value.

Here are just a few Mainstreet Verdicts that you could stumble across in your search for top stocks, and what they tell you about a company.

A top-notch company

This company achieves Mainstreet’s highest stock rating – A1. Historically the company has increased its value, and growth is forecast to continue. The share price offers value for money.

A top-notch company

High stock rating

Good historical growth

Good future growth

Value for money

Tick

Tick

Tick

Tick

A top-notch company historically, but not looking into the future

Whist this company is highly rated based on its most recent financial results, future growth is negative. Negative future growth forecasts generally result in falling share prices.

A top-notch company historically, but not looking into the future

High stock rating

Good historical growth

Good future growth

Value for money

Tick

Tick

Negative

Tick

An average company

Whilst this company fails to achieve Mainstreet’s preferred stock ratings based on its recent historical performance, looking to the future positive growth, albeit average, is forecast. The share price also offers value for money.

An average company

High stock rating

Good historical growth

Good future growth

Value for money

Negative

Negative

Tick

Tick

A bad company in turnaround phase (possibly)

Historically this company is in terrible shape, receiving Mainstreet’s lowest rating for balance sheet quality and business performance. Looking to the future, however, positive growth is forecast and its share price offers value.

A bad company in turnaround phase (possibly)

High stock rating

Good historical growth

Good future growth

Value for money

Negative

Negative

Tick

Tick

 

An all-round terrible company

Everything about this company is bad: Mainstreet’s worst stock rating, negative growth historically, negative growth forecast and its share price is trading far above what the business is actually worth.

An all-round terrible company

High stock rating

Good historical growth

Good future growth

Value for money

Negative

Negative

Negative

Negative

Evaluate stocks in detail

 

Experience simple, intuitive and clear visual representations of company financials.

ShareAnalysis’s Evaluate screens tell the story of a company in a unique visual format that makes it simple to understand a company’s fundamentals and answer the main evaluation questions.

Question to ask

Where to find the answer

What’s good and bad about the company’s fundamentals?

Summary

Are earnings rising?

Earnings

Does the company pay a dividend? What is the level of franking?

Dividends

Does the company use too much debt?

Capital History

How has the company used its equity?

Capital History

Is the company profitable?

Capital History

Is the company self-funding? Does it produce strong cash flow?

Cash Flow

Has the company displayed a favourable track record?

ShareAnalysis Score

How has the value of the company trended historically, and is it forecast to rise over the next few years? Does the share price offer value for money?

Value vs Price

How have forecast valuations changed in the last 12 months?

Forecast Updates

ShareAnalysis’s stock evaluation screens

 

Share Analysis's stock evaluation screens

 Evaluate - Summary

Summary

Commence your evaluation with ShareAnalysis’s Summary. Get a run down of the good and bad points about the company, access the latest news and for ASX-listed companies, recent ASX announcements.

Learn more

Evaluate - Earnings

Earnings

View up to ten years of earnings per share and P/E ratios, plus three years of forecasts, where available.

Learn more

 Evaluate - Dividends

Dividends

10 years of dividends, including franking, plus three years of forecast dividends, is a handy tool for investors chasing income.

Learn more

Evaluate - Capital History

Capital History

See how a business has used its equity and debt to generate the reported profits. Are profits rising? Are you comfortable with the level of debt? And what about profitability? Are profits increasing without the need for additional funding?

Understanding the relationship between equity, debt and profit allows you to determine if the business is profitable and if it’s worthy of a place in your portfolio.

Learn more

Evaluate - Cash Flow

Cash Flow

Cash flow is the lifeblood of any business. Companies with ample cash on hand are able to pay creditors and employees, invest the excess cash back into the business in order to generate more cash and profits, pay dividends or make acquisitions.

ShareAnalysis’s Cash Flow Evaluate screen integrates and interprets up to 10 years of data from a company’s Profit and Loss and Cash Flow Statement, allowing you to instantly see if a company spends more money than it generates.

Learn more

Evaluate - Share Analysis Score

Mainstreet Score

A proprietary algorithmic rating for a company based upon its economic fundamentals and business performance. The Mainstreet Score interprets a company earnings, dividends, equity, debt, performance and cash flow – those elements which ultimately drive value and, in the long run, shareholder wealth.

Mainstreet rates Quality A, B or C. Performance is rated 1, 2, 3, 4 or 5. Combined, the Mainstreet Score rates companies from A1 to C5. The highest quality companies are A1 and green. Poor quality companies receive Mainstreet’s C5 Score and are red.

Learn more

Evaluate - Value vs Price

Value vs Price

The Value vs Price chart keeps track of valuation estimates and daily share prices for every listed company and includes up to three years of forecast valuation estimates.

Its your go-to Evaluate screen to discover value and future growth forecasts. At a glance you can see if the share price represents value and if future growth is forecast. The colour of the chart tells you if the company’s stock rating is good, average or poor.

Learn more

Evaluate - Forecast Updates

Forecast Updates

Forecast valuations change over time. They reflect changes in analyst’s expectations and other new information. Analysts ceasing or commencing coverage, the analyst count, will also impact valuations. Forecast Updates illustrates how valuations have trended over the last 12 months.

Use this chart to determine: Has the change in forecast valuations trended up or down over the period? Has the difference between share price and valuation expanded or contracted (Safety margin changes)? Has the gap between valuations for different forecast years expanded or contracted?

Learn more

To evaluate a company:

• Search for a company and click Evaluate;

• Open Fast Facts for a company, then click Evaluate;

• On the Stock List or Aerial Views, click the company name.

Get the lowdown on a stock

Find out the good and bad points about a company before you dive into its fundamentals.

Start your evaluation of a company at the Summary page. You’ll be presented with:

• The good and bad points about the company’s fundamentals;

• A description of the business, its latest financial results and other key info including a link to its website;

• Historical and forecast economic ratios including the ShareAnalysis Score, return on equity, P/E and dividend yield;

• Links to the company’s ASX announcements (where available) and the latest news sourced direct from Google.

ShareAnalysis Summary

The ShareAnalysis Summary provides a comprehensive overview of ShareAnalysis’s evaluation of a company, highlighting the potential warnings signs and strengths that you should look for on ShareAnalysis’s Earnings, Dividends, Capital History and Cash Flow, Value vs Price and Forecast Updates Evaluate screens.

A top-notch company

You’ll only find positive comments for this company. In terms of its fundamentals, it hasn’t put a foot wrong. And its excellent fundamentals are rewarded with a very attractive Mainstreet Verdict.

The Share Analysis Summary of a top-notch company

An average company

Companies with average fundamentals are typically rated A3, A4, A5, B3, B4 and B5. Their ShareAnalysis Summaries will be a mix of positive and negative points.

An average company

A bad company

Many negative points are a clear sign that a company is in trouble. Typically a poorly rated company will have very poor fundamentals and plenty of negative summary points.

A bad company

Evaluate earnings per share

10 years of historic earnings per share and P/E ratios, plus forecasts, are at your fingertips.

Earnings Per Share (EPS) reflects the portion of a company’s profit allocated to each outstanding share of common stock. Everything being equal, rising earnings are typically mirrored by a rising share price.

ShareAnalysis displays up to ten years of historic Earnings Per Share and, where available, three years of forecast Earnings Per Share (EPS) information.

Each grey column represents annual Earnings Per Share. A green-topped column indicates EPS has grown compared to the previous year while a red column indicates EPS has declined. The blue line represents the historical and forecast P/E Ratio. The data table below the chart displays annual EPS, Market Price and P/E figures.

Good earnings per share

The more a company grows its earnings, the greater the opportunity for its share price to be revalued upwards. Every year, top stocks produce earnings that are higher than the previous year. In the business of investing, consistent and rising earnings is the way to go. The earnings page for companies with good EPS will be predominately green.

A word of caution though: earnings must not be examined in isolation from the other key business drivers such as return on equity and cash flow.

Good earnings per share

 

Volatile earnings per share

Owning shares in companies whose earnings fluctuate each year is not desirable. Whilst there may be a few good years, over the long term if earnings today are the same as what they were 10 years ago, the company isn’t a very good investment.

Volatile earnings may indicate the company does not have a strong competitive advantage, it operates in a highly competitive environment or may be subject to fluctuating commodity prices. The earnings page for companies with volatile EPS will be a mix of red and green.

Volatile earnings per share

 

Bad earnings per share

The last thing you want in your portfolio is a company that generates $1.00 one year then $0.05 the next. A company that reports declining earnings year after year should not have a place in your portfolio. Falling earnings indicates negative growth, and negative growth typically results in falling share prices. These companies should be avoided.

The earnings page for companies with poor EPS will be predominately red.

Bad earnings per share

 

Forecast Earnings Per Share

Hover your mouse over the forecast columns for further insights.ShareAnalysis sources up to three years of earnings forecasts for hundreds of companies. Forecast data is automatically sourced from ShareAnalysis’s data provider, Factset..

Use forecast earnings to understand the future growth prospects for the business. Hover your mouse over the forecast columns for further insights.

Take note of the gold rings on the forecast earnings columns to review the number of analysts and the range of their earnings forecasts.

Reviewing the number of analysts contributing earnings per share forecasts for a stock, and the range of their estimates, gives you a powerful insight into the likelihood that ShareAnalysis’s forecast intrinsic value estimates (which use earnings as an input) are likely to materialise. For companies covered by analysts, ShareAnalysis also automatically computes Bullish and Bearish intrinsic value estimates.

A large range in estimates is a warning sign that there is a degree of uncertainty regarding the outlook for the industry in which the company operates, the company itself, or both. Likewise, if only a couple of analysts are covering a business, and ShareAnalysis’s intrinsic valuations range from $1.00 to $3.00, you need to ask: What is the likely future outlook for this business? To find the answer you’ll need to do some reading.

Of course forecasts will never be 100% correct, and analysts have gotten it wrong in the past. Forecasts can however give you an idea of what the future may hold.

Your job as an investor is to decide whether you agree with the consensus. If you do, and you are comfortable with the risks involved, the decision to purchase shares, at the right price of course, is simple.

Data

What it is

ShareAnalysis prefers

Date

The reporting date for the forecast data. This is the date the company’s accounts close off.

N/A

EPS

The average EPS for the forecasts contributed to ShareAnalysis, for that year.

N/A

Max Earnings Per Share

The highest EPS estimate of the analysts contributing forecasts for the stock.

The closer to the Min, the better

Min Earnings Per Share

The lowest EPS estimate

The closer to the Max, the better.

P/E ratio

Represents how much investors are willing to pay for $1 of the company’s earnings. Is calculated as current market priced divided by EPS.

Lower number

Analyst Number

The number of analysts contributing EPS forecasts for that year.

More than 5. The more analysts, and the tighter their estimates, the more confidence you can have that the forecasts could be realised.

Updates to forecasts

Analysts contributing forecast earnings to ShareAnalysis typically update their estimates when:

• Companies release new information to the market. This will occur at the interim and full year reporting seasons, and throughout the year.

• The analyst meets with the company and changes their opinion regarding the future earnings potential for the business.

• Economic factors, such as the release of a new federal budget or fluctuating commodity prices.

Updated earnings estimates flow through ShareAnalysis’s intrinsic value calculations. The changes are ultimately reflected on the Value vs Price chart. The Forecast Updates chart shows the actual date the changes occurred.

Evaluate dividends per share

10 years of historic dividends per share and dividend yield, plus forecasts and franking, in one spot.

Dividends Per Share (DPS) represent the amount of money paid out of the company’s profits, on a per share basis. They’re the main way companies distribute earnings to shareholders.

Whilst dividends can provide investment income, focusing on dividend yield – the dividend per share as a percentage of the share price – in isolation can be a trap, especially if a company’s current earnings are unsustainable and start deteriorating. Remember, ‘good dividends’ are those that are affordable and sustainable, without compromising a company’s growth. One of the key determinants of affordable and sustainable dividends is the quality of the underlying business and its ability to consistently grow earnings. For more tips on how to find high quality dividend stocks visit ShareAnalysis’s Knowledge Centre.

On a company’s earnings chart, each grey column represents annual Dividends Per Share. A green-topped column indicates DPS has grown compared to the previous year while a red column indicates DPS has declined. The blue line represents the historical and forecast Dividend Yield. Forecast DPS and dividend yield is in the gold section.

The data table below the chart displays annual DPS, Market Price and Dividend Yield figures.

Rising and fully franked dividends per share

For investors seeking income, rising dividends are preferred. However if the dividends are not sustainable, then it really doesn’t matter if the dividends are going up or down. For Australian investors, 100% franked dividends are desirable. A blue ring at the top of the DPS column indicates the dividend is 100% franked.

Example of Rising and fully franked dividends per share

Volatile and partially/unfranked dividends

For Australian investors, partial or unfranked dividends are not desirable. To understand the benefits of franking click here.

Volatile and partially/unfranked dividends

Hover for more info

Hover your mouse over the columns for further insights.

Data

What it is

ShareAnalysis prefers

Date

The company’s latest reporting date.

N/A

DPS

The annual dividends paid out, or forecast to be paid out, on a pre share basis.

N/A

Franking

Percentage of the dividend on which the company has already paid tax.

100%

Dividend Yield

Dividends per share as a percentage of the market price.

Higher than the current inflation rate

For more reading on how to find high quality dividend stocks click here.

The balance sheet, simplified

See what it would feel like to own the whole business… you may be pleased or disappointed.

The Capital History Evaluate screen presents the balance sheet of a business – 10 years of historical financial results and up to three years of forecasts. It illustrates how a business has used its equity, and in some cases debt, to produce the reported profit.

When you look at ShareAnalysis’s Capital History Evaluate screen, ask yourself this question: Would I be prepared to own the entire business?

Chart element

What it is

Useful to answer

Equity

Total Shareholders Equity: It’s the total equity in the business, as reported in each full year annual report. In simple terms, it represents how much money has been injected into the business. It includes profits retained in the business and not paid out to shareholders, plus equity contributed by shareholders through company capital raisings. Top stocks reinvest their profits for growth and rarely raise capital.

Are profits and profitability increasing without the need for additional funding?

 

Debt

Total Debt: Is the total borrowings, as reported in each full year or interim report. Debt increases the risk profile of a company. It directly impacts the bottom line and requires ongoing servicing. Less debt is best.

Are you comfortable with the level of debt?

Normalised Profit After Taxes

Normalised Profit After Taxes: ShareAnalysis removes abnormal and non-recurring revenues and expenses, such as the sale of an asset, from a company’s reported profit to produce a more sustainable representation of a company’s ongoing profits. Normalised Profit After Taxes is calculated from the company’s full year annual reports.

Top stocks can increase profits each year, without raising additional equity or taking on debt, so can increase profitability without increasing risk.

Are profits rising?

Return on equity

Return on Equity: Measures the profitability of a company by comparing how many dollars (equity) were required to produce the company’s profit. Top stocks produce return on equity greater than 15 per cent.

Is the company profitable?

 

Click here to read more about return on equity, and why it’s the best measure of a company’s profitability.

A good balance sheet

A good balance sheet typically has:

• Steadily rising equity as a result of profits being retained and reinvested back into the business.

• Low levels of debt. Good quality balance sheets have net debt / equity ratios less than 40 per cent.

• Rising profits.

• Rising profitability as measured by return on equity. When it comes to profitability, you want to own businesses that can generate a return higher than you could earn from a term deposit or bond, and also allow an extra margin for the additional risk of it being listed on the stock market. Top stocks generate a return on their equity of at least 15 per cent.

A good balance sheet

An average balance sheet

An average balance sheet typically has:

• Steadily rising equity as a result of profits being reinvested back into the business and/or equity being raised (check the data table for Equity Left In (retained profits) and Equity Put In (capital raisings)).

• Moderate levels of debt. Typically average quality balance sheets will be geared at more than 40 per cent.

• Stable or moderately rising profits.

• Average profitability as measured by return on equity typically less than 10 per cent.

An average balance sheet

A bad balance sheet

A bad balance sheet typically has:

• Large jumps in equity (this indicates a capital raising)

• High levels of debt, geared at around 70 per cent or more. Debt increases the risk profile of a company. It directly impacts the bottom line and requires ongoing servicing. Whilst some businesses use debt effectively to accelerate growth, when debt is mismanaged the result can be disastrous. Debt has to be repaid, and creditors will always recoup their losses before shareholders. That why when it comes to debt, less is best.

• Flat or negative profits

• Poor profitability as measured by return on equity typically less than 5 per cent.

A bad balance sheet

Full year and interim data

A company’s Capital History chart will update following the release of the company’s full year and interim results. The width of the column indicates the period on which the data is based.

For companies that have reported interim results, ShareAnalysis displays the equity and total debt in the business, at that point in time.

 

Full year results

Quarterly report

Half year result

Third quarter report

Column width

Full

Quarter

Half

Three quarters

Data is based on:

Full year report

Quarterly report

Half year report

Third quarter report

Forecast data

Forecast data (profits and return on equity) can change daily, however generally update when companies release new information to the market.

Analysts contributing profit forecasts to ShareAnalysis typically update their estimates when:

• Companies release new information to the market. This will occur at the interim and full year reporting seasons, and throughout the year.

• The analyst meets with the company and changes their opinion regarding the future profit potential for the business.

• Economic factors, such as the release of a new federal budget or fluctuating commodity prices.

Updated profit and return on equity estimates flow through ShareAnalysis’s intrinsic value calculations. The changes are ultimately reflected on the Value vs Price chart. The Forecast Updates chart shows the actual date the changes occurred.

Cash flows and reported profits

Is the company a cash cow, or spending more money that it earns?

Cash flow is the amount of cash generated and used by a company in a given period. Cash is critical to a company’s survival. Companies with ample cash on hand are able to pay creditors and employees, invest the excess cash back into the business in order to generate more cash and profits, pay dividends or make acquisitions.

There’s no better insight into what’s left for you as a shareholder in a business, once it’s paid all its bills, than an analysis of cash flow.

When it comes to assessing the investment quality of a company’s cash flow, you should be attracted to those with sufficient money in the bank to fund their operations and produce an ongoing Funding Surplus.

ShareAnalysis’s Cash Flow Evaluate screen integrates and interprets up to ten years of data from a company’s Profit and Loss and Cash Flow Statement, allowing you to instantly see if a company spends more money than it generates. It’s updated annually following the release of a company’s annual report.

Chart element

What it is

Useful to answer

Profits

Reported Net Profit After Taxes: Is the profit figure reported in the annual report and represents the money left over after paying all expenses associated with running the business, including taxes.

Is the company making a profit, and are profits rising?

 

Dividends

Cash Dividends Paid: The amount of cash paid to shareholders in the form of dividends.

Does the company pay a dividend?

Avoid companies whose dividends exceed profits.

Cash Flow Generated from Operations

Cash Flow Generated From Operations: Is the cash flows from the company’s day-to-day trading activities.

Cash Inflows can include sales, receipts from debtors, GST received, and any other cash revenues. Outflows can include all payments related to expenses (usually including interest), payments to creditors, GST paid, prepaid expenses, and any payments for expenses incurred in previous periods (such as accrued wages).

 

Is cash flow relative to reported profits strong?

Top stocks produce cash flows that exceed their reported profits.

Funding Surplus or Gap

Funding Surplus / (Gap):Interprets how the cash generated by the business has been utilised and whether or not the company has required external funding to finance its activities.

Does the company spend more money than it earns?

When it comes to assessing the investment quality of a company’s cash flow, you should be attracted to those with sufficient money in the bank to fund their operations and produce an ongoing Funding Surplus.

Click here to read more about cash flow and how you can use it to find top stocks.

Good cash flows

Excellent cash flows typically exhibit:

• Rising Reported Net Profit After Taxes

• Cash Dividends that do not exceed reported profits

• Cash Flow Generated from Operations that is higher than reported profits

• An ongoing Funding Surplus.

Good cash flows

Average cash flows

Companies that produce average cash flows typically exhibit:

• Flat or up and down Reported Net Profit After Taxes

• Cash Dividends that occasionally exceed reported profits

• Cash Flow Generated from Operations that is higher than reported profits in some years but not others

• Fluctuations between a Funding Surplus and Funding Gap.

Average cash flows

Poor cash flows

Companies that produce poor cash flows typically exhibit:

• Flat, declining or negative Reported Net Profit After Taxes

• Cash Dividends that frequently exceed reported profits

• Cash Flow Generated from Operations that, more often than not, are lower than Reported Net Profit After Taxes

• An ongoing Funding Gap.

Poor cash flows

The Mainstreet stock rating system

The equities research team underpinning the operations of ShareAnalysis is provided by Mainstreet. Mainstreet is a specialist equities research house that monitors and regularly reviews the proprietary software system, its analytical processes and resulting outputs. Mainstreet’s team of Analysts are also regular providers of recognised, premium content and reports included in ShareAnalysis subscriptions.   

Its a five star rating system for stocks

Mainstreet’s A1 – C5 stock rating system interprets the quality of a company’s balance sheet and year-to-year changes in its economic performance. It’s a two-part rating system:

• Quality is rated A, B, C

• Performance is rated 1,2,3,4,5

Top quality companies (they’re rated A) have little or no debt on their balance sheets, strong earnings and good cash flow. Each year high performing companies (1, 2) typically produce rising earnings, strong return on equity (higher than 15%), good cash flow that is higher than reported profits and they rarely spend more money in a year than what they earn.

If you’re the type of investor that doesn’t like to dive into company fundamentals, then Mainstreet’s rating system will be your best friend.

The Quality Score

Rated A through C, Mainstreet’s Quality Score measures the strength of a company’s balance sheet as at its latest interim or full year financial results. The Score examines a company’s earnings and the level of debt to determine the likelihood of the company suffering a major liquidity event, such as bankruptcy.

Chart element

What it is

Typical characteristics

High quality with a low risk of default

High quality with a low risk of default

• Positive earnings

• Very low debt (net debt / equity ratio typically less than 40%)

• Plenty of cash in the bank for a rainy day

• Rarely undertake capital raisings

Adequate quality balance sheet and moderate risk of default.

Adequate quality balance sheet and moderate risk of default

• Positive earnings

• Geared balance sheet (net debt/equity ratio typically more than 40%)

• Some cash in the bank

• May undertake capital raisings

Poor quality balance sheet and a high risk of default.

Poor quality balance sheet and a high risk of default

• Very low or negative earnings

• High debt (net debt/equity typically more than 50%)

• Poor cash flows

The Performance Score

Rated 1 though 5, Mainstreet’s Performance Score examines year-to-year changes in the underlying economic performance of a business, as at its latest interim or full year results.

Rating

What it means

Typical characteristics

Excellent performance

Excellent performance

• Positive and rising earnings

• Positive and rising dividends

• Strong and rising return on equity (above 15%)

• Strong and rising cash flows

Good performance

Good performance

• Positive and rising earnings

• Positive and rising dividends

• Strong but stable return on equity

• Strong but stable cash flows

Average performance

Average performance

• Positive but declining earnings

• Average but flat or declining return on equity (around 10%)

• Declining cash flows

Poor performance Poor performance

• Stable or declining earnings

• Flat or declining return on equity

• Poor cash flows

 Very poor performanceVery poor performance

• Negative earnings

• Poor and declining or negative return on equity

• Poor cash flows

Interim Mainstreet Scores

Companies can release up to four financial reports per year. Interim reports capture all relevant financial and business activities that occur since the last report and provide investors with up-to-date information on the state of the business.

A company’s Mainstreet Score is based upon the most recent financial results. These can be interim (quarter, half or third quarter) or full year results. The width of the columns on a company’s Mainstreet Score Evaluate screen indicate the period on which the Score is calculated. Regardless of whether a Mainstreet Score is based on full or interim results, the Score of a company that’s displayed throughout the ShareAnalysis system represents the most recent financial position of that company.

The combined Mainstreet Score

Combined, Mainstreet’s Quality Score and Performance Score interpret a company’s most recent reported financial results.

On Aerial View, the best companies are bright green. Lime green stocks come in at second place, orange is average and red is not good.

Colour on the Aerial View

Mainstreet Scores

What it means

A1, A2

A1, A2

Excellent quality balance sheet and top notch business performance. Mainstreet’s preferred scores.

 

B1, B2

B1, B2

Adequate quality balance sheet and top notch business performance. Also Mainstreet’s preferred scores.

A3, A4, A5

A3, A4, A5

Excellent quality balance sheet and average, poor or very poor business performance. These companies aren’t at risk of going broke, but historically they haven’t shot the lights out either.
B3, B4, B5B3, B4, B5Adequate quality balance sheet and average, poor or very poor business performance. These stocks could go either way, however historically their performance has been less than desirable.
 C1, C2, C3, C4, C5C1, C2, C3, C4, C5Poor quality balance sheet. Regardless of their economic performance, these businesses are considered high risk.

You can tell a lot from a company’s history

A company’s ShareAnalysis Score history can tell you a lot about where the company has been, and whether or not its in a good position to move forward.

A consistently top-notch company

This company is a standout business that can’t be faulted. Its balance sheet is top quality and each year it reports improving economics. It’s the kind of stock you want in your portfolio. Failing a significant disruption to this company’s business, it should continue to deliver strong results and remain a top stock.

A consistently top-notch company

A rising star

Over the years this business has been putting runs on the board, and their improving economics have been rewarded with an improving Mainstreet Score. When Mainstreet Scores starting improving, it’s time to take notice.

A rising star

A falling star

This business isn’t what it used to be. Declining balance sheet quality combined with declining earnings and return on equity, means a falling Mainstreet Score. Declining economic performance usually results in a falling share price.

A falling star

A consistently mediocre business

No matter what this business does to try and improve its situation, nothing seems to work. Some stocks will always remain stuck in the same old cycle of average balance sheet quality and average economic performance.

A consistently mediocre business

A basket case

Unless you’re a punter, you want to steer well clear of these types of companies. More often than not they report negative profits and lose money, are loaded with debt and consistently ask their shareholders to give them more money through capital raisings.

A basket case

Growth projections, valuations and share prices at your fingertips

Quickly spot growth and value stocks. The Value vs Price chart will also help you steer clear of the duds.

Take one glance at a company’s Value vs Price chart and you can quickly determine:

•  How the company is rated (its Mainstreet Score) based on the colour of the chart

•  If historical growth has been positive or negative

•  If future growth is forecast to be positive or negative

•  The historic and forecast intrinsic values of the business

•  If the share price represents value for money.

To learn more about intrinsic value click here.

Chart element

What it is

Useful to answer

Share price chart

Share price chart:plots daily closing share prices. Its colour represents the company’s Mainstreet Score.

How has the share price moved in the past?

More often than not, share prices tend to follow the intrinsic value of the business.

Historic Intrinsic Value

Historic Intrinsic Value: are estimated using reported data.

Historic valuations update at each full year report to reflect the company’s latest reported financial results.

Historic Intrinsic Value is represented by the black line.

Has historic growth been positive or negative?

Failing a significant disruption to the company’s business, companies that have a track record of positive growth are typically well positioned to continue delivering growth into the future.

 Forecast Intrinsic Value

Forecast Intrinsic Value: is automatically calculated by ShareAnalysis. The formula uses consensus analyst earnings, dividends, equity and profit forecasts as inputs into the formula. Forecast valuations can, although they rarely do, change daily. Changes are tracked on the Forecast Updates chart.

Where forecasts are not available, ShareAnalysis uses a proprietary formula that examines the company’s history of valuations and assumes that the historical trend will continue. This assumption is used to produce forecast valuations, known as ‘Intrinsic Value (Derived)’.

Is there a tight consensus, or a large variation?

A tight consensus indicates the future of the company is more certain. This is because the company has a track record of delivering consistent results, or management are transparent about the future prospects of their business.

A large variation indicates the analysts providing earnings estimates disagree on the future growth opportunities for the business.

 Hover for more informationHover for more information: Move your mouse along the share price chart to see daily share prices and intrinsic value data.

What are the intrinsic values?

In the forecast area the hover presents the forecast Bullish Intrinsic Value and Bearish Intrinsic Value.

Hidden features

Zoom

Zoom: Click and hold. Drag, then let go. ShareAnalysis will zoom into the section you highlighted. When zoomed in its much easier to see daily share prices and ASX announcements.

ASX Announcements

Announcements (ASX only): Click the ‘Announcements’ icon to turn on ASX Announcements. Click the arrow icon to open and read the announcement.

Chart colours

A company’s Value vs Price chart is coloured according to its Mainstreet Score.

Chart colour

Mainstreet Scores

What it means

Green

A1, A2

Excellent quality balance sheet and top notch business performance. According to Mainstreet’s preferred scores.

 

Lime green

B1, B2

Adequate quality balance sheet and top notch business performance. Also Mainstreet’s preferred scores.

Orange

A3, A4, A5

Excellent quality balance sheet and average, poor or very poor business performance. These companies aren’t at risk of going broke, but historically they haven’t shot the lights out either.
Burnt orangeB3, B4, B5Adequate quality balance sheet and average, poor or very poor business performance. These stocks could go either way, however historically their performance has been less than desirable.
 RedC1, C2, C3, C4, C5Poor quality balance sheet. Regardless of their economic performance, these businesses are considered high risk.

Safety Margin

Safety margin helps you decide what you’re prepared to pay for a company’s shares. Visually you can see the safety margin on the Value vs Price chart. The actual figure can be found in the Mainstreet Verdict.

Some investors like to go bargain hunting, and will only buy shares when the price is less than intrinsic value. Other investors will be happy to pay more than value, but only if the company is forecast to deliver strong future growth.

Value vs Price and the Mainstreet Verdict

The Mainstreet Verdict tells you what the Value vs Price chart illustrates, and vice versa.

To understand more about the ShareAnalysis Verdict click here.

 

Element

Value vs Price Chart

Mainstreet Verdict

Mainstreet Score

Share Analysis Score

Verdict Share Analysis Score

History (Historical Change in Value)

History (Historical Change in Value)

Verdict History

Future (Forecast Change in Value)

Future (Forecast Change in Value)

Verdict Future
Safety MarginSafety MarginVerdict Safety Margin

What a Value vs Price chart tells you about a company

A top-notch company forecast to continue delivering growth

Top-notch companies deliver growth that beats the index, and are positioned to continue beating the index moving forward. They are also highly rated by Mainstreet’s stock rating system.

A top-notch company forecast to continue delivering growth

A rising star

Over the years this business has been steadily building up momentum. It has reached a point where growth looks like its set to skyrocket.

A rising star

A falling star

The good times are over for this company. In recent years its value has been declining, and the future looks just as bleak.

A falling star

A consistently mediocre business

Some companies never change their spots. They just plod along, producing flat returns. For shareholders there doesn’t seem to be a light at the end of the tunnel. This company may pay consistent dividends, which compensates shareholders for the flat share price performance.

A consistently mediocre business

A basket case

This company is in a vicious cycle of reporting losses, raising capital and from their shareholders’ perspective, generally just behaving badly. They’ve never made any money, and it doesn’t look like the future will be any different.

A basket case

Review trends in forecast valuations

See if a stock’s valuation has been upgraded or downgraded.

A company’s forecast intrinsic valuations change over time. The Forecast Updates chart tracks how valuations have changed over the last 12 months.

Businesses, and the markets in which they operate, are dynamic. Nothing stays the same. Forecast valuations change when analysts adjust their opinion about the future prospects for a stock. Some of the most common reasons analysts change their opinion include:

•  Company releases new information to the market

•  Changing economic conditions

•  Changing government policies

•  Analyst/s commences or ceases coverage

Use the Forecast Updates chart to determine if:

•  The change in forecast valuations has trended up or down over the period

•  The difference between share price and valuation has expanded or contracted (Safety margin changes)

•  The gap between valuations for different forecast years has expanded or contracted.

What the chart tells you

The Value vs Price chart presents the latest valuations for a company.

The Forecast Updates chart tells you whether the valuation for a specific forecast year has been trending upwards or downwards.

The Forecast Updates chart tells you whether the valuation for a specific forecast year has been trending upwards or downwards.

Click a year on the Forecast Updates chart to ‘turn on’ a valuation for that year. Click again to turn it off. You can do the same with ‘Analyst count for year’.

Spotting trends in a company’s forecast valuation

Upgrades

Upgrades

Downgrades

Downgrades

Daily changes

If a portion of a company’s earnings are derived in a foreign currency, then due to currency movements the forecast valuation will change daily.

Daily changes