TClarke - Piotroski factor analysis

PUBLISHED: Apr 20 2017 @ 05:24 | Comments (0) |

Companies on unusually low cyclically adjusted price earnings ratios, CAPEs, often have a string of losses combined with years of accumulating debt, making them vulnerable to financial stress, and ultimately bankruptcy.

It is important to examine this issue for TClarke (LSE:CTO). I’ll use Piotroski’s nine accounting variables.

Is the company profitable?

In the year to December 2016 TClarke was profitable. One Piotroski point.

Does the company produce positive cash flow from operations?

Yes, £4m. Thus a clear Piotroski point is scored here.

Has the return on capital employed improved between 2015 and 2016?

Beginning of year total assets increased by about 6% but net income before extraordinary items rose by 44% (to £4.9m), thus ROCE rose. A third Piotroski point.

Is cash flow greater than profits?

Yes if we use profits after extraordinary items, but no if we use profits before deducting extraordinary items. I’ll be cautious and not award a Piotroski point.

Has the ratio of long-term debt to total assets of the year diminished?

Long-term debt has fallen from £5m to £3m when total assets…………………………To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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