Newpark Resources, Inc. (NYSE:NR) Valuation Review & Update

Posted by Carlos Wienstein on October 29, 2018 at 10:21 am

The ERP5 Rank is an investment tool that analysts use to discover undervalued companies.  The ERP5 looks at the Price to Book ratio, Earnings Yield, ROIC and 5 year average ROIC.  The ERP5 of Newpark Resources, Inc. (NYSE:NR) is 8045.  The lower the ERP5 rank, the more undervalued a company is thought to be.

Under recent market conditions, it may be quite difficult to be overly bearish. Most signs seem to be pointing in the right direction as investors keep concentrating on superior returns from the stock market. At this point in time, investors may have to make the tough decision whether to be fully invested in the stock market, or keep some cash handy on the sidelines. As we have seen, there will be a few days or weeks where market action may spur some second guessing, but the bulls seem they are still going to keep running. Many investors may be crafting plans for when the good times inevitably come to an end. Being prepared for market changes may help weather the storm when it comes. 

The Q.i. Value of Newpark Resources, Inc. (NYSE:NR) is 36.00000. The Q.i. Value is another 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 EBITDA Yield is a great way to determine a company’s profitability. This number is calculated by dividing a company’s earnings before interest, taxes, depreciation and amortization by the company’s 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 EBITDA Yield for Newpark Resources, Inc. (NYSE:NR) is 0.109102.

The Earnings to Price yield of Newpark Resources, Inc. (NYSE:NR) is 0.017229.  This is calculated by taking the earnings per share and dividing it by the last closing share price.  This is one of the most popular methods investors use to evaluate a company’s financial performance.  Earnings Yield is calculated by taking the operating income or earnings before interest and taxes (EBIT) and dividing it by the Enterprise Value of the company.  The Earnings Yield for Newpark Resources, Inc. (NYSE:NR) is 0.055902.  Earnings Yield helps investors measure the return on investment for a given company.  Similarly, the Earnings Yield Five Year Average is the five year average operating income or EBIT divided by the current enterprise value.  The Earnings Yield Five Year average for Newpark Resources, Inc. is 0.043451.

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 Newpark Resources, Inc. (NYSE:NR) is 0.023105.

Price Index

We can now take a quick look at some historical stock price index data. Newpark Resources, Inc. (NYSE:NR) presently has a 10 month price index of 0.91395. 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 0.85435, the 24 month is 1.15588, and the 36 month is 1.50864. Narrowing in a bit closer, the 5 month price index is 0.74502, the 3 month is 0.73458, and the 1 month is currently 0.76683.

Returns

Looking at some ROIC (Return on Invested Capital) numbers, Newpark Resources, Inc. (NYSE:NR)’s ROIC is 0.071740. The ROIC 5 year average is 0.061891 and the ROIC Quality ratio is 1.597439. 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.

Newpark Resources, Inc. (NYSE:NR) has a Price to Book ratio of 1.270544. This ratio is calculated by dividing the current share price by the book value per share. 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 16.654107, and a current Price to Earnings ratio of 58.040826. The P/E ratio is one of the most common ratios used for figuring out whether a company is overvalued or undervalued.

Newpark Resources, Inc. (NYSE:NR) presently has a current ratio of 3.70. The current ratio, also known as the working capital ratio, is a liquidity ratio that displays the proportion of current assets of a business relative to the current liabilities. The ratio is simply calculated by dividing current liabilities by current assets. The ratio may be used to provide an idea of the ability of a certain company to pay back its liabilities with assets. Typically, the higher the current ratio the better, as the company may be more capable of paying back its obligations.

The Price to book ratio is the current share price of a company divided by the book value per share.  The Price to Book ratio for Newpark Resources, Inc. NYSE:NR is 1.270544.  A lower price to book ratio indicates that the stock might be undervalued.  Similarly, Price to cash flow ratio is another helpful ratio in determining a company’s value.  The Price to Cash Flow for Newpark Resources, Inc. (NYSE:NR) is 16.654107.  This ratio is calculated by dividing the market value of a company by cash from operating activities.  Additionally, the price to earnings ratio is another popular way for analysts and investors to determine a company’s profitability.  The price to earnings ratio for Newpark Resources, Inc. (NYSE:NR) is 58.040826. This ratio is found by taking the current share price and dividing by earnings per share.

Investors may be doing a portfolio evaluation as we head into the second half of the calendar year. Assessing results from the first half may help identify what went right, and what went wrong. Many investors may have missed the charge, and they keep hoping for stocks to retreat to go on a buying spree. Gaining a solid grasp on the markets may take years to truly figure out. Combining technical analysis and tracking fundamentals may provide a large boost of confidence to the investor. Being able to sift through the countless chatter may take some perseverance and extreme focus. Creating a winning portfolio might only be a few sharp trades away.