The Magic Formula diverges from Graham's strategy by exchanging for Graham's absolute price and quality measures (i.e. price - to - earnings ratio below 10, and debt - to -
equity ratio below 50 percent) a ranking system that seeks those stocks with the best combination of price and quality more akin to Buffett's value investing philosophy.
Not exact matches
Some European
equity indices — Germany's DAX and France's CAC 40 — are at long - term price - to - earnings
ratios of around 10 times, well
below their historic average.
CVX's debt - to -
equity ratio is very low at 0.21 and is currently
below that of the industry average, implying that there has been very successful management of debt levels.
If one compares WLL (Jan 11 close — $ 47.55) & KOG (Jan 11 close — $ 9.20) on the parameters mentioned in the table
below, WLL appears to be an obvious choice due to its lower valuation and debt /
equity ratio.
The majority of lenders offer mortgage and home
equity applicants the lowest possible interest rate when the loan - to - value
ratio is at or
below 80 %.
They all sport little or no debt, a high historical return on
equity and investment, and a PEG
ratio below 1.
Below are two of the best long run valuation metrics for US
equities: Tobin's Q
ratio or replacement cost and CAPE or the cyclically adjusted price to earnings or PE
ratio.
The chart
below shows the respective price / book
ratios for the S&P 500
Equity Index (in red) and for the MSCI Asia Pacific Index (in blue) over the last eight years.
A closely watched investment - performance
ratio called return on
equity is well
below levels achieved a decade ago.
On March 3, 2009, when the S&P 500 Index was
below 700, NTU explained and documented why U.S.
equities were extremely cheap and offered a very attractive risk / reward
ratio.
Since 1962 the yield on the U.S. 10 - year Treasury note has explained roughly 25 % to 30 % of the variation in U.S. large cap
equity multiples, as measured using the trailing price - to - earnings (P / E)
ratio in the chart
below.
Stocks were sold if their ranking fell
below the top 40 per cent of the US universe or if the company's debt /
equity ratio rose above 1.3.
Loan to value
ratio that is
below 85 % indicates too little
equity for the private lender to benefit.
The majority of lenders offer mortgage and home
equity applicants the lowest possible interest rate when the loan - to - value
ratio is at or
below 80 %.
The debt to
equity ratio is still
below one and will likely fall over the next few years.
The table
below has information on gross expense
ratios, management fees, and other operational fees for all Total Dividend
Equity Funds.
Most home
equity loans have a loan to value
ratio below 70 %.
Look for debt free or
below - average debt - to -
equity ratios.
The table
below has information on gross expense
ratios, management fees, and other operational fees for all Micro Cap
Equity Funds.
Presently, I have invested in the
below 20 funds in the following
ratio: Large Cap: 2 Funds Small & Mid Cap: 8 Funds Diversified
Equity: 7 Funds Balanced: 2 Funds Sector - Banking: 1 Fund Kindly advise if this spread of funds is good or if it may need some tweaking.
My investment are in
ratio of 30:70 (Debt:
Equity) for long term goals as
below for 10 - 15 years 1.
Set out
below are the results of two Fama and French backtests of the book value - to - market
equity (the inverse of the PB
ratio) data from 1926 to 2013.
The table
below has information on gross expense
ratios, management fees, and other operational fees for all Water
Equity Funds.
Financial covenants are frequently
ratios that the borrower is required to stay above or
below (a 2:1 debt - to -
equity ratio or interest coverage
ratio, for example), but there are usually also restrictions on debt levels and minimum working capital requirements.
Some recent private
equity deals are even dipping
below a one - to - one
ratio, bankers say, meaning the company, at least initially, will not generate enough cash to make interest payments.
While, Wade is correct that investors who got out of the market using Shiller's P / E
ratio would have missed the run in the markets from 2009 to present, those same individuals most likely sold at the bottom of the market in 2008 and only recently began to return as shown by net
equity inflows
below.
Bankers and private
equity investors involved in the auction said the interest coverage
ratio was
below one.
The table
below has information on gross expense
ratios, management fees, and other operational fees for all Small Cap Growth
Equity Funds.
The earlier exercise revealed that in the current market environment, a stock with a return on
equity of 12 % would be considered if it's trading with a price - earnings
ratio below 17.
I don't have a specific number in mind, but I prefer when the long - term debt /
equity ratio is
below 1.