Beacon Roofing Supply, Inc. (BECN): How Significant Is the 1.026054 PI for the Shares?

The Price Index is a ratio that indicates the return of a share price over a past period. The price index of Beacon Roofing Supply, Inc. (BECN) for last month was 1.026054 while the 3m is at 1.287183. This is calculated by taking the current share price and dividing by the share price at the specifiied time frame mentioned. If the ratio is greater than 1, then that means there has been an increase in price over that timeframe. If the ratio is less than 1, then we can determine that there has been a decrease in price. Similarly, investors look up the share price over 12 month periods. The Price Index 12m for Beacon Roofing Supply, Inc. (BECN) is 0.636463. The Price Index 5Y stands at 0.950895.

Many traders and investors opt to study technical analysis when approaching the stock market. Technical analysts study changes in stock price that occur over various amounts of time. Some analysts will study by the minute or hour. Others will choose to zoom out to days, weeks, months, or even longer. Studying price action over different time periods can help provide the investor with valuable information to help make the best possible investing decisions. Keeping an eye on the stock market, it can be seen that certain trends repeat over time. These trends or patterns might not be exact, but they can be noticeable. Spotting these patterns and watching for momentum shifts can be a highly useful tool for any trader or investor. Many chartists will focus on multiple indicators when doing technical analysis. Becoming familiar with indicators and learning to spot trends may take a lot of time and effort to achieve. 

Looking at some ROIC (Return on Invested Capital) numbers, Beacon Roofing Supply, Inc. (BECN)’s ROIC is
0.217912. The ROIC 5 year average is 0.227886. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits.

Beacon Roofing Supply, Inc. (BECN) has a Price to sales ratio of 0.373737. Investors may use Price to Book to display how the market portrays the value of a stock. Checking in on some other ratios, the company has a Price to Cash Flow ratio of 4.447254, and a current Price to Earnings ratio of 33.380952. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.

Checking in on some valuation rankings, Beacon Roofing Supply, Inc. (BECN) has a Value Composite score of 9. Developed by James O’Shaughnessy, the VC score uses five valuation ratios. These ratios are price to earnings, price to cash flow, EBITDA to EV, price to book value, and price to sales. The VC is displayed as a number between 1 and 100. In general, a company with a score closer to 0 would be seen as undervalued, and a score closer to 100 would indicate an overvalued company. Adding a sixth ratio, shareholder yield, we can view the Value Composite 2 score which is currently sitting at 14.

Watching some historical volatility numbers on shares of Beacon Roofing Supply, Inc. (BECN), we can see that the 12 month volatility is presently 43.7267. The 6 month volatility is 44.0189, and the 3 month is spotted at 43.5177. Following volatility data can help measure how much the stock price has fluctuated over the specified time period. Although past volatility action may help project future stock volatility, it may also be vastly different when taking into account other factors that may be driving price action during the measured time period. 

based on value factors. He didn’t have databases such as ValueSignals at his disposal, but used people like his apprentice Warren Buffet to fill out stock sheets with the most important data.

Graham was always on the watch for firms that were so discounted, that if the company went into liquidation, the proceeds of the assets would still return a profit.

The ratio he used to identify these companies was Net Current Asset Value or NCAV. This ratio is much more stringent compared to book value (total assets – total liabilities) and is calculated as follows:

NCAV = Current Assets – Total Liabilities
Current Assets = Cash & ST Investments + Inventories + Accounts Receivable
Graham was only happy if he could buy the company at 2/3 of the NCAV. That’s the sort of margin of safety he was looking for.

This strategy was very successful during the years after Graham published it in his book ‘Security analysis’ in 1934 and also in more recent studies it has proven to provide superior results. A study done by the State University of New York to prove the effectiveness of this strategy showed that from the period of 1970 to 1983 an investor could have earned an average return of 29.4%, by purchasing stocks that fulfilled Graham’s requirement and holding them for one year. Nowadays it’s very difficult to find companies that meet Graham’s criteria.

We calculate NCAV to Market as follows:

NCAV-to-Market Ratio = NCAV divided by Market Cap

Beacon Roofing Supply, Inc. (BECN) has an NCAV to Market value of -0.760514.

Book to Market

Beacon Roofing Supply, Inc. (BECN) has a book to market ratio of 0.785531. A ratio used to find the value of a company by comparing the book value of a firm to its market value. Book value is calculated by looking at the firm’s historical cost, or accounting value. Market value is determined in the stock market through its market capitalization.

Formula:

Book-to-Market Ratio= Common Shareholders Equity/Market Cap

Most investors are more familiar with P/B or Price-to-book. This is just the inverted value.

Price-to-Book Ratio=Market Cap/Common Shareholders Equity

Cash Flow on Capex

Another ratio S&P Analyst Richard Tortoriello recommends to use is ‘Operating Cash Flow to capital expenditure’. (‘Quantitative Strategies for Achieving Alpha’) This ratio is used by analysts to determine a company’s ability to fund operations. It helps to get a better understanding of whether a company is able to buy more assets without having to issue debt or equity.

A rising cash flow to capital expenditures ratio might indicate that the company is in a position to grow.

Please note that some industries are more capital intensive than others, which should be taken into account when evaluating companies.

Formula:

Cash flow on Capex = Cash Flow from Operations / Capital Expenditure

The Cash Flow on Capex for Beacon Roofing Supply, Inc. (BECN) is 11.723125.

Investors will most likely be looking ahead to the next round of company earnings reports. As the reports come in, all eyes will be on the companies that post wide margin earnings beats or misses. Many investors will be closely tracking which way analyst estimates are being adjusted right before earnings. This may provide some insight on how good or bad the numbers for the quarter are likely to be. Investors might want to take a look at their holdings after the earnings reports to make sure that nothing extremely odd is occurring after crunching the numbers.