The reference index MSCI USA Prime Value 100% hedged to EUR Index includes companies with a relatively low valuation, taking into account indicators such as the price-to-earnings, price-to-book, price-to-sales as well as price-to-cash flow
and price-to-earnings ratios are good but not outstanding.
AN INVESTOR WHO IS WILLING TO follow the value school of investing should consider eight factors in selecting securities (or mutual funds), including price-to-earnings ratio, price-to-cash flow
ratio, price-to-book value ratio, dividend yield, private market value, adjusted net working capital, insider buying and stock repurchases.
CHICAGO -- Kevin Matras shows how to search for stocks with increasing Cash Flows, but low Price-to-Cash Flow
However, the Price-to-Cash Flow
, or P/CF, is another great ratio to do just that.
Investors should regard time-tested truths, about price-to-cash flow
and regression to a mean, the way engineers regard Newton's Laws," said Hirtle.
Lamar's stock has traded in a wide price-to-cash flow
(P/CF) multiple range of 10 to 22 over the last five years.
It trades at a discount to its industry peers using other relative valuation ratios such as price-to-book, price-to-sales, and price-to-cash flow
The company fits the strategy's definition of being a contrarian investment because its P/E and price-to-cash flow
ratios are in the bottom 20 percent of the market.
Likewise, SCG trades at a moderate discount to its industry peers based on price-to-cash flow
multiples yet at relative parity with respect to multiples of sales and book value.
It qualifies as contrarian by being in the bottom 20% of the overall market for two or more of the following four ratios: price-to-earnings, price-to-cash flow
, price-to-book and price-to-dividend.
The price-to-cash flow
of a company should be in the bottom 20 percent of the overall market.