Cardinal Ethanol, LLC (OTCPK:CRDE) vs. Delta Natural Gas Company, Inc. (NasdaqGS:DGAS): How are these stocks valued?

Checking in on some valuation rankings, Cardinal Ethanol, LLC (OTCPK:CRDE) has a Value Composite score of 19. 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 12. 

Individual investors might be digging a little deeper into the playbook in order to create a winning plan for the remainder of the calendar year. The diligent investor typically has a portfolio that is diversified and ready to encounter any unforeseen market action. Even after creating the well-planned portfolio with expected returns, nobody can be absolutely sure that those returns will be seen. Setting realistic expectations can help the investor from becoming discouraged if the original plan runs into a bit of a snag. Of course every investor would like to enter the stock market and see sizeable profits right off the bat. This may only be wishful thinking for investors who aren’t ready to put in the time and energy to make sure the overall strategy stays on track and the portfolio stays properly managed.

Technicals at a Glance
In taking a look at some other notable technicals, Cardinal Ethanol, LLC (OTCPK:CRDE)’s ROIC is 0.127791. The ROIC 5 year average is 0.285939 and the ROIC Quality ratio is 1.581301. 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.

There are many different tools to determine whether a company is profitable or not.  One of the most popular ratios is the “Return on Assets” (aka ROA).  This score indicates how profitable a company is relative to its total assets.  The Return on Assets for Cardinal Ethanol, LLC (OTCPK:CRDE) is 0.105063.  This number is calculated by dividing net income after tax by the company’s total assets.  A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

Shareholder Yield
We also note that Cardinal Ethanol, LLC (OTCPK:CRDE) has a Shareholder Yield of 0.114569 and a Shareholder Yield (Mebane Faber) of 0.08957. The first value is calculated by adding the dividend yield to the percentage of repurchased shares. The second value adds in the net debt repaid yield to the calculation. Shareholder yield has the ability to show how much money the firm is giving back to shareholders via a few different avenues. Companies may issue new shares and buy back their own shares. This may occur at the same time. Investors may also use shareholder yield to gauge a baseline rate of return.

Cardinal Ethanol, LLC (OTCPK:CRDE) has a current MF Rank of 4767. Developed by hedge fund manager Joel Greenblatt, the intention of the formula is to spot high quality companies that are trading at an attractive price. The formula uses ROIC and earnings yield ratios to find quality, undervalued stocks. In general, companies with the lowest combined rank may be the higher quality picks.

Price Index
We can now take aquick look at some historical stock price index data. Cardinal Ethanol, LLC (OTCPK:CRDE) presently has a 10 month price index of 1.14815. The price index is calculated by dividing the current share price by the share price ten months ago. A ratio over one indicates an increase in share price over the period. A ratio lower than one shows that the price has decreased over that time period. Looking at some alternate time periods, the 12 month price index is 1.14815, the 24 month is 1.24000, and the 36 month is 0.81579. Narrowing in a bit closer, the 5 month price index is 1.10714, the 3 month is 1.10714, and the 1 month is currently 1.00000.

The Piotroski F-Score is a scoring system between 1-9 that determines a firm’s financial strength.  The score helps determine if a company’s stock is valuable or not.  The Piotroski F-Score of Cardinal Ethanol, LLC (OTCPK:CRDE) is 5.  A score of nine indicates a high value stock, while a score of one indicates a low value stock.  The score is calculated by the return on assets (ROA), Cash flow return on assets (CFROA), change in return of assets, and quality of earnings.  It is also calculated by a change in gearing or leverage, liquidity, and change in shares in issue.  The score is also determined by change in gross margin and change in asset turnover.

The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The Value Composite score of Delta Natural Gas Company, Inc. (NasdaqGS:DGAS) is 52.  A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company.  The VC1 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, and price to earnings.  Similarly, the Value Composite Two (VC2) is calculated with the same ratios, but adds the Shareholder Yield.  The Value Composite Two of Delta Natural Gas Company, Inc. (NasdaqGS:DGAS) is 46.

In taking a look at some other notable technicals, Delta Natural Gas Company, Inc. (NasdaqGS:DGAS)’s ROIC is 0.073031. The ROIC 5 year average is 0.083094 and the ROIC Quality ratio is 25.391145. 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.

Once the individual investor has done all the fundamental homework and found a few stocks that they think are poised to be future winners, they may want to figure out when to best get into the market. Many investors will turn towards technical analysis to accomplish this. Technical analysis can help identify entry and exit points by studying price trends and movements over time. Some technical indicators are very complex and others are very simple. One goal of focusing on technical indicators is to help make confusing price information easier to interpret and understand. Many investors will find signals that they like to follow, but focusing on just one indicator may not provide the full picture of what is really going on. Many investors will combine technical indicators to help round out the spectrum. Although technical analysis can be a very useful tool for the investor, it is important to remember that stock prices are inherently unpredictable. Even the most seasoned investors may have to adjust their charts occasionally if trades are not working out as planned.

The Q.i. Value of Delta Natural Gas Company, Inc. (NasdaqGS:DGAS) is 35.00000.  The Q.i. Value is a helpful tool in determining if a company is undervalued or not.  The Q.i. Value is calculated using the following ratios: EBITDA Yield, Earnings Yield, FCF Yield, and Liquidity.  The lower the Q.i. value, the more undervalued the company is thought to be.

The FCF Yield 5yr Average is calculated by taking the five year average free cash flow of a company, and dividing it by the current enterprise value.  Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.  The average FCF of a company is determined by looking at the cash generated by operations of the company.  The Free Cash Flow Yield 5 Year Average of Delta Natural Gas Company, Inc. (NasdaqGS:DGAS) is 0.029805. 

Shareholder Yield
We also note that Delta Natural Gas Company, Inc. (NasdaqGS:DGAS) has a Shareholder Yield of 0.019058 and a Shareholder Yield (Mebane Faber) of 0.02731. The first value is calculated by adding the dividend yield to the percentage of repurchased shares. The second value adds in the net debt repaid yield to the calculation. Shareholder yield has the ability to show how much money the firm is giving back to shareholders via a few different avenues. Companies may issue new shares and buy back their own shares. This may occur at the same time. Investors may also use shareholder yield to gauge a baseline rate of return.

MF Rank
Delta Natural Gas Company, Inc. (NasdaqGS:DGAS) has a current MF Rank of 7383. Developed by hedge fund manager Joel Greenblatt, the intention of the formula is to spot high quality companies that are trading at an attractive price. The formula uses ROIC and earnings yield ratios to find quality, undervalued stocks. In general, companies with the lowest combined rank may be the higher quality picks.

PI
We can now take aquick look at some historical stock price index data. Delta Natural Gas Company, Inc. (NasdaqGS:DGAS) presently has a 10 month price index of 1.33248. The price index is calculated by dividing the current share price by the share price ten months ago. A ratio over one indicates an increase in share price over the period.

A ratio lower than one shows that the price has decreased over that time period. Looking at some alternate time periods, the 12 month price index is 1.20258, the 24 month is 1.59014, and the 36 month is 1.67142. Narrowing in a bit closer, the 5 month price index is 1.01897, the 3 month is 1.03156, and the 1 month is currently 1.00033.

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