Cervus Equipment Corp (TSXV:$CERV) specializes in selling and servicing equipment for the construction, industrial, transportation, and agricultural industries. So what can we learn from the indicators? Let’s take a look.

Return on Equity, Return on Investment, and Return on Assets

There are three important ratios to consider when looking at a stock: Return on Equity, Return on Investment, and the Return on Assets.

The ROE is sometimes called ‘the mother of all ratios’. It gives insight into whether a company is operating well or not, and determines how well a company is using its investment funds to generate profit.

Cervus currently holds a Return on Equity of 0.119595.

The ROI is a ratio that determines whether a company is profitable or not. Specifically, the ratio looks at the company’s capital and compares that to their revenue to see if they are generating profits. You can calculate the ROI by dividing the net operating profit by the employed capital, which is calculated by subtracting current liabilities from total assets. This ratio is generally measured over 5 years.

Cervus currently has a 5-year average ROI of 0.123768.

Finally, we can take a look at the ROA. The ROA indicates how profitable a company actually is, by weighing its profits against its total assets. The number is calculated by dividing net income after tax by total assets. The ROA is one of the best indicators to see how well a company is managing its assets.

Cervus currently has a ROA of 0.043861.

Valuation Rankings

The Value Composite score uses five valuation ratios; Price to Earnings, Price to Cash Flow, EBITDA to EV, price to sales, and price to book value. Generally, the number ranges from 1 to 100 with 0 indicating an undervalued company and 100 indicating an overvalued company. Cervus currently sits at a VC of 4.

The Gross Margin score goes from 1 to 100 where a score of 1 is positive and 100 is negative. Cervus currently has a Gross Margin score of 17.

An MF rating can be used to spot high-quality companies that are trading at a favorable price. Companies with low combined rankings are generally thought to be higher quality picks. The MF rating utilizes earnings yield ratios and the ROI to determine which stocks are undervalued. Cervus currently sits at an MF Rank of 3024.

Finally, we can look at the ERP5 Rank. This rank is also used to spot undervalued companies, by utilizing four ratios; Earnings Yield, ROI, 5-year average ROI, and Price to Book. Generally speaking, the lower the ERP5 Rank, the better. Cervus currently holds an ERP5 Rank of 1683.

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