If Cash Is King, Is EXFO Inc (TSX:EXF)’s 11.6550% Enough?

EXFO Inc (TSX:EXF) has seen year over year cash flow change of 11.6550%.  This is calculated as the one year percentage growth of the firm’s cash flow from operations from their publicly filed statement of cash flows.  Cash reserves are an important element for an investor to consider when analyzing a stock.  A continued reduction in cash flow could spell trouble for a firm while on the other hand solid continued cash flow growth should translate into stock growth.

Investors will be closely watching which way market momentum will shift as we cruise into the back half of the year. Earnest investors will most likely be pouring over the latest earnings reports trying to spot buying opportunities. Many investors will pay especially close attention to companies that have posted large surprise factors over the past quarter. As the dust settles, investors might be monitoring stock price activity following the earning release in order to set up a plan for trading around the next earnings season.

In taking a look at some other key growth stats we note that the one year Growth EBIT ratio stands at -153.4160% for EXFO Inc (TSX:EXF) and is a calculation of one year growth in earnings before interest and taxes. The one year EBITDA growth number stands at -57.2910% which is calculated similarly to EBIT Growth with just the addition of amortization.

Taking even a further look we note that the 1 year Free Cash Flow (FCF) Growth is at 23.8310%. The one year growth in Net Profit after Tax is -1498.5900% and lastly sales growth was 10.7870%.

EXFO Inc (TSX:EXF) has a present suggested portfolio ownership rate of 0.0203 (as a decimal) ownership. Target weight is the volatility adjusted recommended position size for a stock in your portfolio. The maximum target weight is 7% for any given holding. The indicator is based off of the 100 day volatility reading and calculates a target weight accordingly. The more recent volatility of a stock, the lower the target weight will be. The 3-month volatility stands at 48.1314 (decimal). This is the normal returns and standard deviation of the stock price over three months annualized.

Diving down into some additional near-term indicators we see that the Capex to PPE ratio stands at 0.235884 for EXFO Inc (TSX:EXF). The Capex to PPE ratio shows you how capital intensive a company is. Stocks with an increasing (year over year) ratio may be moving to be more capital intensive and often underperform the market. Higher Capex also often means lower Free Cash Flow (Operating cash flow – Capex) generation and lower dividends as companies don’t have the cash to pay dividends if they are investing more in the business.

Investors may be circling the wagons wondering what’s in store for the stock market over the next few months. Capitalizing on the current trends may be just what the doctor ordered. Searching for value in the current investing landscape may be a priority for some investors. The mindset of one investor may be completely different from another. Sometimes stocks that look too good to be true actually are, and those that are actually very good may not look that enticing. Keeping a close watch on technicals and fundamentals may be a good way to start filtering through the vast sea of equities. Many stock enthusiasts will also keep a sharp focus on positive estimate revisions to help gain an edge in the markets. Whatever the strategy, investors will no doubt be searching far and wide for consistent outperformers.

In looking at some key ratios we note that the Piotroski F Score stands at 3 (1 to 10 scale) and the ERP5 rank holds steady at 11748. The Q.I. Value of EXFO Inc (TSX:EXF) currently reads 59 on the Quant scale. The Free Cash Flow score of -0.083312 is also swinging some momentum at investors. The Canada based firm is currently valued at 21.

Some other notable ratios include the Accrual Ratio of 0.002759, the Altman Z score of 2.343689, a Montier C-Score of 4 and a Value Composite rank of 37.

Diversification can be an important aspect of any investor’s portfolio. Investors may choose to spread out stock holdings between foreign stocks and stocks with different market capitalizations. Investors may have to first become aware of the risk associated with owning a wide variety of stocks. Owning stocks that belong to different industries may also be a help to the success of the portfolio. Often times, sectors may trade off being market leaders. Owning all one sector may leave too much risk exposed if the sector suddenly tanks and falls out of favor with investors. Investors may need to occasionally do a strategic review of the equity portion of the portfolio. Knowing exactly what is held may help the investor when the time comes to make some adjustments.

In addition to Capex to PPE we can look at Cash Flow to Capex. This ration compares a stock’s operating cash flow to its capital expenditure and can identify if a firm can generate enough cash to meet investment needs. Investors are looking for a ratio greater than one, which indicates that the firm can meet that need. Comparing to other firms in the same industry is relevant for this ratio. EXFO Inc (TSX:EXF)’s Cash Flow to Capex stands at 1.374856.

Typically bull markets are times when investors may be willing to be a bit more speculative with stock selection. Managing risk is generally at the forefront of many strategies. Investors trying to shift the odds in their favor may be searching for the perfect balance and diversification to help mitigate the risk and enjoy healthier profits. With so many different stocks to choose from, it may take a while to zoom in or a particular set. Investors will also be watching the next wave of economic data to get a better sense of how the overall economy is fairing. With so much noise in the markets, it may be necessary to narrow the gaze in order to set the table for success. Investors may be on the lookout for the major catalyst that either keeps the bulls charging into the second half the year, or wakes up the sleeping bears.