The PE ratio measures the
reported earnings of a company to its current stock price. While earnings are
easy to manipulate on the balance sheet, this ratio gives you a sense of what
buyers are willing to pay for the stock—what they believe it will do in
the future.
Comparing a stock's PE to the average PE of companies in its industry gives
you a sense of market sentiment about the stock and how well it fares
financially. It's not the only number, nor the most important, but comparing
similar companies is valuable. A ratio far above or below that of its peers is
significant.
Industries are more specific than sectors, so companies within most
industries are more similar than are companies within an industry. Be aware
that the size and customers of companies are important to their prospects.
The PE ratio measures the
reported earnings of a company to its current stock price. While earnings are
easy to manipulate on the balance sheet, this ratio gives you a sense of what
buyers are willing to pay for the stock—what they believe it will do in
the future.
Comparing a stock's PE to the average PE of companies in its sector gives
you a sense of market sentiment about the stock and how well it fares
financially. It's not the only number, nor the most important, but comparing
similar companies is valuable. A ratio far above or below that of its peers is
significant.
Be aware that sectors are very broad, with many types of companies in the
same sector.
The cash yield of a stock is
the ratio of free cash per share—real dollars available after bringing in
revenue and paying bills—to the current price of the stock. It's similar
to the PE ratio, but it's less prone to manipulation through accounting
practices.
In general, the less you have to pay to make more money, the better.
The free cash flow
jitter of a stock measures how much the company's free cash flow varies
from its historical trend, on average. While it's always nice to make more
money than you expected, a company with predictable free cash flow is stable
and good. A company with wild swings in its free cash flow warrants further
research.
This stock has short interest! This means that people have shorted it.
Why does that matter? They've made a bet that price will decrease from where
they bought it. Maybe there are financial problems, or maybe there's a value
play.
As of the latest analysis, there are 494,282 shares shorted. With 26,542,178 shares available for purchase and an average trading
volume over the past 10 trading days of 110,830, it would take at least 4.46 days for all of the short holders to cover their
shorts.
Is Cadiz Stock on Sale?
Based on our analysis, we believe that you should not buy Cadiz
right now. It might be a good stock to own—we just can't prove
it with value analysis right now. Proceed with caution.
Should You Buy CDZI Stock?
Does Cadiz have a coherent story? Does it have a plan to
continue to make money? Is it worth your time? Only you can decide where to go
from here. Our investment guide helps you ask the
right questions, including how to buy stocks.
Use these research links for more information.
Worked example: CDZI
This example shows how we apply the Trendshare checklist to CDZI: earnings power, cash generation, valuation, and margin of safety.
We check: business quality, free cash flow, P/E, and margin of safety.
Step 1 — Snapshot
Price: 2.53
Market cap: $110M
EPS: -1.106
Step 2 — Valuation checks
P/E: —
FCF yield: -11.4%
Date checked: Dec 16, 2022
Step 3 — Margin of safety
Compare price to fair value and safety price.
Look for durable cash generation and reasonable leverage.
Decide if it passes your personal checklist.
Illustrative sparkline of recent price-like movements (not an actual price series). The blue line shows a simplified trend; the gray baseline is a notional recent level. This graphic is a visual aid only — use the numeric values in the steps above for decisions.