Tag Archives: equity screens

Net Working Capital Screen

Developed a screen *proxy* for Graham style net net value (NWC – total debt) by utilizing NWC only.

  • NWC > Market Capitalization

Observations: most companies laden with net debt (of 8 companies) based on companies ranging from 2bn – 15bn on major US exchanges.

Piotroski Screen

  • Piotroski score of 8 or 9
  • < 75% of 52-week high

Notable Equities:

  • Kate Spade – growth play from break-even PE; however bottomed in February 2015
  • Skechers – missed Q3 results resulting in 50% decline; strong growth at $3.2bn revenue (~$200mm Net Income equivalent to 7% margin; EPS expected to double by 2018); international growth focus

Cash Screen

Net Debt < (30%) of Market Cap
Notable Results:

  • Visteon Corporation
  • NetApp

Preference is to find companies with > $1,000 net cash, as any acquisition rumors are likely to garner significant attention to stir the markets.

Screening Review

  • Visteon Corporation (VC)
    • Now a pure play “cockpit” player following divestiture / sale of Halla Visteon
    • Strong capital allocation
    • Management has been buying a significant number of shares
    • $2.9bn market cap and $744m Enterprise value (2.8bn cash & 384 debt)
  • United Therapeutics (UTHR)
    • $4,995m market cap
    • $953m in cash, $5.4mm debt
    • Risks
      • Competition from Actelion
      • Remodulin (largest product) has generic competitor in Summer 2018
      • Limited product pipeline