Buffett Quality Score [Energy]The Buffett Quality Score for the Energy sector is designed to meticulously evaluate the financial health and quality of companies operating within this dynamic industry. Each selected financial ratio is specifically chosen based on its relevance and significance within the Energy sector context.
Selected Financial Ratios and Criteria:
1. Return on Assets (ROA) > 5%
Relevance: In the Energy sector, where asset-intensive operations are common (e.g., oil exploration and infrastructure), a robust ROA above 5% indicates efficient asset utilization, crucial for profitability.
2. Debt to Equity Ratio < 1.0
Relevance: Energy companies often require substantial capital for projects and operations. A low Debt to Equity Ratio (<1.0) suggests prudent financial management with less reliance on debt financing, vital in a capital-intensive industry vulnerable to economic cycles.
3.Interest Coverage Ratio > 3.0
Relevance: Given the capital-intensive nature of Energy projects, maintaining a healthy Interest Coverage Ratio (>3.0) ensures the company's ability to service debt obligations, particularly important during periods of economic volatility affecting commodity prices.
4. Gross Margin % > 25%
Relevance: Energy companies face varying production costs and pricing pressures. A Gross Margin exceeding 25% reflects efficient cost management and pricing power, critical in mitigating volatility in commodity prices.
5. Current Ratio > 1.5
Relevance: Energy projects often require substantial working capital. A Current Ratio > 1.5 indicates sufficient liquidity to cover short-term obligations, essential for operational continuity in an industry susceptible to market fluctuations.
6. EBITDA Margin % > 15%
Relevance: Energy companies must manage operating costs effectively. An EBITDA Margin > 15% signifies strong operational efficiency and profitability, crucial for sustaining growth amidst market uncertainties.
7. Altman Z-Score > 2.0
Relevance: The Energy sector experiences cyclical downturns and price volatility. An Altman Z-Score > 2.0 indicates financial stability and resilience, vital for weathering industry-specific challenges.
8. EPS Basic One-Year Growth % > 5%
Relevance: Energy companies' earnings growth is closely tied to commodity prices and market demand. EPS growth > 5% indicates positive momentum and adaptability to industry shifts.
9. Revenue One-Year Growth % > 5%
Relevance: Energy companies operate in a dynamic market influenced by geopolitical factors and global demand. Revenue growth > 5% reflects market adaptability and expansion potential.
10. Piotroski F-Score > 6
Relevance: Fundamental strength is paramount in the Energy sector, characterized by capital-intensive projects. A Piotroski F-Score > 6 highlights solid operational and financial performance, critical for long-term sustainability.
Score Interpretation:
0-4 Points: Indicates potential weaknesses across critical financial areas, necessitating closer scrutiny.
5 Points: Suggests average performance based on industry-specific criteria.
6-10 Points: Signifies strong overall financial health and quality, aligning with the demanding requirements of the Energy sector.
Development and Context:
The selection and weighting of these specific financial metrics underwent rigorous industry-specific research to ensure their applicability and reliability within the unique operational environment of the Energy sector. This scoring framework aims to provide actionable insights for stakeholders navigating the complexities of Energy industry investments and operations.
Disclaimer: This information serves as an educational resource on financial evaluation methodology tailored for the Energy sector. It does not constitute financial advice or a guarantee of future performance. Consult qualified professionals for personalized financial guidance based on your specific circumstances and investment objectives.
Buffett
Buffett Quality Score [Industry]The Buffett Quality Score is a composite indicator developed to assess the financial health and quality of companies operating within the Industrial sector. It combines a carefully selected set of financial ratios, each weighted with specific thresholds, to provide a comprehensive evaluation of company performance.
Selected Financial Ratios and Criteria:
1. Return on Assets (ROA) > 5%
ROA measures a company's profitability by evaluating how effectively it utilizes its assets. An ROA exceeding 5% earns 1 point.
2. Debt to Equity Ratio < 1.0
The Debt to Equity Ratio reflects a company's leverage. A ratio below 1.0 earns 1 point, indicating lower reliance on debt financing.
3. Interest Coverage Ratio > 3.0
The Interest Coverage Ratio assesses a company's ability to meet interest payments. A ratio above 3.0 earns 1 point, indicating strong financial health.
4. Gross Margin % > 25%
Gross Margin represents the profitability of sales after deducting production costs. A margin exceeding 25% earns 1 point, indicating better pricing power.
5. Current Ratio > 1.5
The Current Ratio evaluates a company's liquidity by comparing current assets to current liabilities. A ratio above 1.5 earns 1 point, indicating sufficient short-term liquidity.
6. EBITDA Margin % > 15%
EBITDA Margin measures operating profitability, excluding non-operating expenses. A margin exceeding 15% earns 1 point, indicating efficient operations.
7. Altman Z-Score > 2.0
The Altman Z-Score predicts bankruptcy risk based on profitability, leverage, liquidity, solvency, and activity. A score above 2.0 earns 1 point, indicating financial stability.
8. EPS Basic One-Year Growth % > 5%
EPS One-Year Growth reflects the percentage increase in earnings per share over the past year. Growth exceeding 5% earns 1 point, indicating positive earnings momentum.
9. Revenue One-Year Growth % > 5%
Revenue One-Year Growth represents the percentage increase in revenue over the past year. Growth exceeding 5% earns 1 point, indicating healthy sales growth.
10. Piotroski F-Score > 6
The Piotroski F-Score evaluates fundamental strength based on profitability, leverage, liquidity, and operating efficiency. A score above 6 earns 1 point, indicating strong fundamental performance.
Score Calculation Process:
Each company is evaluated against these criteria.
For every criterion met or exceeded, 1 point is assigned.
The total points accumulated determine the Buffett Quality Score out of a maximum of 10.
Interpretation of Scores:
0-4 Points: Indicates potential weaknesses across multiple financial areas.
5 Points: Suggests average performance based on the selected criteria.
6-10 Points: Signifies strong overall financial health and quality, meeting or exceeding most of the performance thresholds.
Research and Development:
The selection and weighting of these specific financial ratios underwent extensive research to ensure relevance and applicability to the Industrial sector. This scoring methodology aims to provide valuable insights for investors and analysts seeking to evaluate company quality and financial robustness within the Industrial landscape.
The information provided about the Buffett Quality Score is for educational purposes only. This document serves as an illustrative example of financial evaluation methodology and should not be construed as financial advice, investment recommendation, or a guarantee of future performance. Actual results may vary based on individual circumstances and specific factors affecting each company. We recommend consulting qualified professionals for personalized financial advice tailored to your individual situation.
Buffett IndicatorThis is an open-source version of the Buffett indicator. The old version was code-protected and broken, so I created another version.
It's computed simply as the entire SPX 500 capitalization divided by the US GDP. Since TradingView does not have data for the SPX 500 capitalization, I used quarterly values of SPX devisors as a proxy.
I tried to create another version of the Buffett indicator for other countries/indexes, but I can't find the data. If you can help me find data for index divisors, I can add more choices to this indicator.
It's interesting to see how this indicator's behavior has changed in the last few years. Levels that looked crazy are not so crazy anymore.
Disclaimer
Please remember that past performance may not be indicative of future results.
Due to various factors, including changing market conditions, the strategy may no longer perform as well as in historical backtesting.
This post and the script don’t provide any financial advice.
Buffett Indicator: Wilshire 5000 to GDP Ratio [WhaleCrew]Our Implementation of the famous Buffett Indicator a long-term valuation indicator for stocks.
Calculation: Wilshire 5000 Index divided by US GDP (Gross Domestic Product)
Buffett Indicator [Bitcoin Machine]This is the Warren Buffett Indicator, the total market cap relative to the US gross domestic product (GDP). It is also called "Market Cap to GDP Indicator". For the market cap typically the Wilshire 5000 total market cap is used, which is representing the value of all stocks traded in the United States. Tradingview just provides the Wilshire W4500. We can calculate the W5000 by adding the S&P500 to the W4500.
Market Cap to GDP is a long-term valuation indicator and as pointed by Warren Buffett, the indicator is “probably the best single measure of where valuations stand at any given moment.” It used as a broad way of assessing whether the country’s stock market is overvalued or undervalued, compared to a historical average.
Remark: The Wilshire W4500 and the S&P500 are indices and denoted in "index points" (not USD). The Original Buffett Indicator is using market cap in US-Dollar. So the right scale of the indicator is different to the original one.
Intrinsic value calculation Intrinsic value calculator based on Warren Buffet's and Ben Graham's work
In value investing determing the true value of a COMPANY instead of a stock price is crucial.
This little indicator shows the "Intrinsic value" of the choosen stock meaning the value of the stock in 10 years time. Calculation is based on historical book value's average annual growth rate and dividends paid.
Since this is about long therm investing, use monthly charts.
"Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.”
– Warren Buffett
One way to calculate that is by the growth in per share book value and dividends taken in the forseeable future (10 years) than discount it with the prevailing 10 year note's rate.
In the inputs you have to set 2 variables:
1. How many years back you have the first data for book value per share available?
2. What was the per share book value that year?
(Bookvalue is ploted in olive colour and you can get the oldest one if you move your cursor over the latest data on the left)
CAUTION! You have to reenter it for every stock you analyse as this is stock-specific data!
After setting the input data, you will see the "Intrinsic Value"'s pink curve ploted over the price chart.
If the price is well below the pink line, the company is undervalued and can be a possible applicant for long therm investment.
Margin of safety: when the current price is 50% below the intrinsic value that means a 10% yearly growth potential (100% growth in 10 years) or a 100% margin of safety.
I am a beginer in Pine so please excuse my coding...
If anybody knows hot to extract historical data from 15 years ago, please share it with me, so I can automate the whole calculation without inputs necessary.
Buffet Indicator [QuantNomad]Created a version of Buffet Indicator for TradingView.
He calls it "the best single measure of where valuations stand at any given moment".
Computations are very simple, it is simply the ratio between total stock market capitalization and US GDP.
I used the S&P 500 capitalization instead of the total so value here might be a bit lower than in the original indicator.
Very high values might mean that we're now in a bubble and correction might follow shortly.
