Asset Detailed Analysis
In this section, we select a fund and a stock to analyse them in more detail. We demonstrate how you can find an investment in line with your objectives using Piocaro's intuitive infographic analysis.
For the purpose of this analysis, we selected one mutual fund from the Most Efficient Mutual fund category.
To learn more about how to analyse ETFs, please watch Demo2 video under the Resources tab.
If you want to invest in a mutual fund, start by looking at its profile and stated investment objectives.
The fund specifies that it targets medium and long term Income investors who seek high income streams but do not want to compromise their capital safety. It invests primarily in bonds that have low investment ratings but in return pay higher yields. Such investments are relatively safe (compared to equity) because debt holders claims are prioritised for repayment in the case of bankruptcy.
Read a fund profile carefully to verify that its objectives, investment strategy and horizon match your own.
To check whether the fund's investment mandate is in line with its portfolio, look at the Portfolio Holdings.
We see that the portfolio is mainly comprised of below investment grade bonds: bonds with rating B and BB make up around 75% of the DHSTX investment portfolio. Around 10% of the portfolio value is allocated to investment grade rated bonds (BBB) and 4% to below B rated bonds. These allocations seem consistent with the statements in the fund's profile.
The fund manager, William P. Zox, has been with DHSTX for 18 years. Many investors prefer fund managers who have a long tenure on a fund because their experience and past performance gives investors get more confidence regarding the fund's future performance.
Check if there has been recent changes in a fund's management. If a manager is new to the fund, the fund's past performance is an indication of the past manager's abilities, not those of the new manager. Such investments carry more uncertainty.
NAV, Returns, Fees and Yield
This section displays the fund's key performance figures.
The Net Asset Value (NAV) is a per share/unit price of the fund at a specific date or time. Unlike stocks and ETFs whose price changes every second, a mutual fund's NAV is calculated daily.
DHSTX is traded at $11.49 and this is the highest price the fund has reached in the past year. The fund's historical and year to date returns also look very promising as DHSTX has been delivering positive, stable returns over the past 10 years. These results look even more attractive when we look at the fund's fees. Its Expense ratio is 0.63% which is considered quite low for an actively managed fund. The fund's fees are also low compared to other funds in the same category.
The fund's current yield is comparable to what its peers offer. Its total assets are below the category average but some investors prefer this as they believe it is easier to manage a smaller amount of assets.
A turnover rate shows the percentage of the fund's holdings that have changed over the past year.
High turnover ratios are typically associated with greater expenses, which can reduce the fund's overall performance. However, certain types of mutual funds; for example, bond funds, tend to have higher turnover rates because of specific strategies they employ.
DHSTX is a bond fund with strong performance so its high turnover rate seems justifiable.
Risk Adjusted Performance
This section provides detailed information about the fund's performance.
The diagram at the top left corner (polar chart) maps the fund's efficiency based on three criteria: return, risk and fees. The blue area is the fund, the green area is the top performer average and the orange area is the fund's peers.
The polar chart enables you to compare a fund with its peer averages across multiple metrics for a given trailing period. Each ring in the chart represents a rating number, from the inner small ring representing a rating of 1 (low) to the outer large ring representing a rating of 5 (high). A good asset will have a narrow blue diamond shape which indicates a fund has low fees and downside risk but high returns and efficiency.
The polar chart can also be presented as a bullet chart (top right section of the page under Overall Rating ).
A bullet chart enables you to compare a fund's overall performance with its peer averages for a given metric. On this chart, the fund is shown as a blue shaded area in the inner portion of the horizontal bar. The category average is shown as an orange vertical line in the chart. The top performers average is shown by the green vertical line in the chart. For fees and risk, low ratings are shown in the green area of the chart while high risk and high fee funds are shown in the red area of the chart.
We can see that DHSTX has been constantly outperforming its peers for the last 1, 3, 5 and 10 years. Its fees and risk are far below the average while its returns are far above the average, which makes DHSTX one of the best performing funds in its category. Over the past 10 years, DHSTX has also demonstrated better Sharpe, Sortino, M2 and Treynor ratios than its peers indicating that DHSTX investors receive higher returns for the same level of risk.
Based on the fund's historical performance, there is higher probability that it will generate positive returns in the next 6 months. The estimated return range is between -3.97% and 6.22%.
The return range is calculated with 98% probability. There is 98% probability that future returns will be within the projected range and only 2% probability they will be outside of the range.
The return range shows how much you might potentially earn or lose. It is important to evaluate whether you can accept accept the potential loss.
The Purchase section displays the financial requirements for starting and maintaining your account with the mutual fund.
Initial - The minimum amount of money you need to invest in the fund to open your account. DHSTX requires investors to have at least $2.500 to start the account.
AIPinitial - If you are using a fund's automatic investment program (AIP) you can start your account with less money. With an AIP, you promise to let the fund access your account every month until you reach its normal minimum investment requirement. For AIP participating investors DHSTX allows you to start investing with only $25.
Additional - The amount of extra contributions allowed by the fund after the account has been established. DHSTX does not allow any extra contributions.
AIPadd - The amount of extra contributions allowed by the fund after the account has been established if an investor is participating in AIP. The minimum additional AIP investment DHSTX accepts is $1.
The next graph shows how a hypothetical $10.000 investment in DHSTX has performed in the past five years and how it compares to S&P 500 index, S&P U.S. High Yield Corporate Bond performance.
Before February 2016 the fund and the benchmark index were tracking very close, but for the next three years the fund underperformed the index.
Investors who seeks returns similar to a market index might choose to invest in ETFs. ETFs are specifically designed to track a particular market index.
This table summarises each year's returns, dividends and dividend yield for the past 10 years.
Use this table to identify trends in dividends and returns, and check if a fund's historical year-by-year performance meets your investment threshold.
Although DHSTX's returns have fluctuated quite a bit during the 10 year period, its has constantly delivered stable dividends of at least 4% each year. In this case, the volatility of total returns by year shows that DHSTX will not suite short term investors.
DHSTX is a good investment option for those seeking to invest in high yield bonds. It is one of the most efficient mutual funds in its category as it has higher returns but lower fees and downside risk than its peers. It will meet the needs of income focused investors with medium or long investment horizons and relatively low risk tolerance.
Stock investing requires careful examination of relevant financial data to evaluate a company's performance. However, analysing the company's income statement, balance sheet and cash flow statement can be time consuming and complicated, especially for beginning investors. Piocaro presents the key financial information in an easy to interpret format to help investors quickly and easily identify assets that meet their goals.
To obtain more information about a stock, click on its ticker symbol in the Ticker column. This displays the stock's the key performance data, including its price, return, dividend yield, the company's profile, financial statements and information about its owners and shareholders.
The Profile section displays information about the company's sector and category, and describes business activities.
The Company belongs to the Basic Materials sector and operates in two market segments: producing and selling crop protection chemicals, and lithium manufacturing. The Company is based in the US and its shares are qualified as Large Equity.
Price, Returns and Distribution Yield
The next section displays information about about the stock's Price, Return, and Distribution Yield.
During the previous 52-week period the lowest Price the stock was $60.16 and the highest price was $90. This gives us some some insights about the stock's volatility.
We also see the stock Returns over the past 10 years, as well as returns to date. It seems that FMC Corporation is struggling to deliver consistent and stable returns.
FMC Corporation does not reward its investors with high dividends. Its Dividend Yield is below the peer group average.
Typically, companies in the growth phase reinvest as much as possible back into the business and do not pay dividends, while mature companies might have generous dividend payout policies.
The next four ratios, P/E (ttm), P/E (fwd), PEG and P/B are very important because they indicate how the market values the company. Not only do these ratios demonstrate if the company is overvalued or undervalued, but they also can be used to compare companies within the same industry.
The P/E ratio shows how much extra investors are willing to pay for $1 of the company's past (ttm) or future (fwd) earnings. A high ratio might mean that the stock price is high and might be overvalued, while a low ratio might indicate that the stock is undervalued. To tell whether FMC is undervalued or overvalued, compare the FMC P/E ratio to that of other companies within the Basic Materials sector.
In general, the lower the P/E the ratio the better. But a low ratio is not always a good thing. It could mean that the market does not believe in a company's growth opportunities and expects earnings to be lower in the future.
Investors typically prefer undervalued stocks because they are cheap to buy and have great potential to increase in value. However, high P/E value does not necessarily mean the stock is overvalued. Fast-growing companies often have high P/E ratios because investors are willing to pay extra for the company's future growth opportunities. If we look at the FMC forward-looking P/E, we see that it is much lower than its past-focused P/E. This tells us that the market believes in the company's growth potential and expects its earnings to increase in the future.
To check whether FMC P/E value is actually justified by growth in earnings, use the PEG ratio.
The PEG ratio takes growth factor into account and thus allows you to assess the relative value offered by a given stock, particularly when compared to other stocks.
The efficient market hypothesis states that each stock should have a PEG ratio of 1. A ratio of 1 means that a stock is fairly valued because its current price and forecasted earnings growth are in equilibrium. A PEG ratio of less than one typically indicates that a stock is undervalued, while a stock with a PEG ratio greater than 1 is typically considered overvalued. P/B ratio is interpreted in the same way and shows if the company's share price is justified by the amount of the company's net assets.
P/B is a very industry-dependant ratio. Some industries and companies, in the technology sector for example, have high P/B ratios because most of their assets are intangible and do not appear on the balance sheet. Thus, industry and peer group P/B should be considered while interpreting the P/B of a particular company.
FMC has a PEG ratio of 1.8 and P/B ratio of 4.04. These values can be used to compare FMC to other companies in its industry to determine if it is undervalued or overvalued relative to its peers.
The last data in this section contains information about the company's Market Capitalisation, EPS and Enterprise Value. These figures can also be used to compare FMC with other investment options.
EPS is an important financial metric that shows the proportion of a company's profit that is allocated to each outstanding ordinary share in the company.
Establishing trends in EPS growth gives a better idea of how profitable a company has been in the past and might be in the future. FMC is expected to almost double its current EPS (from $3.69 to $6.7), which is a positive sign for investors.
Sustainable Profitable Growth
This section displays information about the key indicators of the company's performance.
Piocaro consolidates the company's Growth, Profitability and Financial Health into Stock Performance measures, which makes it easier for you to compare stocks of different companies. The polar chart demonstrates how FMC performance (blue area) compares to the performance of its peers (orange) and S&P 500 index (green). We see that FMC falls below peer companies and the index in profitability and financial health, although it is demonstrating very high growth rates. More detailed analysis reveals that FMC low profitability and health are the results of high leverage. The company has high revenue and NOPAT growth, and average operating margin. This indicates that the company is successful in generating revenues and managing operating expense. However, the high debt ratio undermines FMC profitability.
This section displays detailed information about the stock performance over various periods and how it compares with the company's peers and the index.
The charts show that, overall, FMC is more volatile than both its peers and S&P 500 index, but its returns are comparable to that of the industry. This is not a very good indicator because it means that the company's investors might not be adequately rewarded for the risk they take. However, the company seems to significantly outperform its peers in the long term.
The next chart demonstrates how a hypothetical $10.000 investment in FMC has performed in the past 5 years and how it compares to the S&P 500 index, where the black line in the index and blue line is FMC.
The chart shows that for the last 5 years the stock consistently underperformed the index. We can also see the breakdown of Returns, Dividends, Dividend Yield and Total Returns by year for the past 10 years. The table shows that the company's returns and dividends fluctuated significantly during the entire period.
This section is particularly important for investors who seek a steady stream of income from their investment. FMC Corporation has high dividend coverage ratio, which indicates the company has good capacity to pay off dividends. However, the company might not be the best choice for income investors at this stage. The company is growing at a fast pace and reinvests a vast portion of its profits back to the business - only 37.96% of profits are paid as dividends. Also, the dividend yield is quite moderate and, as discussed previously, FMC dividends are volatile.
This section displays analysts expectations of how the stock will perform in the next quarter and year.
It seems that market analysts have positive expectations about the company's future performance. They predict Revenue, EPS and the share price to increase in the future. Based on these predictions, analysts recommendation is moderate buy. This means that if you are considering companies in the same sector, this might be a good option to consider. Analysts seem to believe in the company's growth potential and see it as a prospective company in its sector.
This section displays information about the company's Income Statement, Balance Sheet and Cash Flow.
For the past four years and the first two quarters of 2019, FCM Corporation has been profitable and had positive cash flows in every year except 2015. In 2018, the company experienced a sharp rise in revenue. We can assume there were some changes in the company's strategy because, as the cash flow chart demonstrates, significant investments were made in 2017. The company used debt to finance its growth as financial obligations on the balance sheet doubled in 2017 compared to 2016. The quarterly and yearly balance sheet charts show that FMC has been gradually reducing the amount of debt in its capital structure, while increasing equity. However, despite a sharp rise in revenue in 2018, the profit margin decreased, which could be explained by high costs of servicing the debt.
Ownership & Shareholders
This section displays information about the company's top shareholders, including both institutional and insider holders.
FMC Corporation stocks might be a good choice for growth investors who have a long investment horizon and can tolerate the above average volatility. Although the company is experiencing some profitability issues, it has high and stable revenue streams and good growth potential. This investment might not be suitable for income investors who have low tolerance for risk.