Western Forest Products Inc. (TSX:WEF) has a Piotroski F-Score of 7 at the time of writing. The F-Score may help discover companies with strengthening balance sheets. The score may also be used to spot the weak performers.

Joseph Piotroski developed the F-Score which employs nine different variables based on the company financial statement. A single point is assigned to each test that a stock passes. Typically, a stock scoring an 8 or 9 would be seen as strong. On the other end, a stock with a score from 0-2 would be viewed as weak.

Investing in the stock market has traditionally offered bigger returns than other types of investments. Along with the opportunity for higher returns comes a higher amount of risk. Stocks can be exposed to both market risk and business or financial risk. Market risk may be evident when the overall market takes a nose dive. Investors may hold stock of a company that has been performing great, but due to poor market conditions, the stock decreases in value. Investors may look to offset this risk by investing in other vehicles that don’t tend to move together. The business risk with stocks involves factors that may cause a company to perform poorly. This may include bad management, heightened competition, and declining company profits. Investors may try to limit this risk by creating a diversified portfolio including stocks from different sectors.

Current Ratio

The Current Ratio of Western Forest Products Inc. (TSX:WEF) is 2.09. The Current Ratio is used by investors to determine whether a company can pay short term and long term debts. The current ratio looks at all the liquid and non-liquid assets compared to the company’s total current liabilities. A high current ratio indicates that the company might have trouble managing their working capital. A low current ratio (when the current liabilities are higher than the current assets) indicates that the company may have trouble paying their short term obligations.

The Return on Invested Capital (aka ROIC) for Western Forest Products Inc. (TSX:WEF) is 0.172950.  The Return on Invested Capital is a ratio that determines whether a company is profitable or not.  It tells investors how well a company is turning their capital into profits.  The ROIC is calculated by dividing the net operating profit (or EBIT) by the employed capital.  The employed capital is calculated by subrating current liabilities from total assets.  Similarly, the Return on Invested Capital Quality ratio is a tool in evaluating the quality of a company’s ROIC over the course of five years.  The ROIC Quality of Western Forest Products Inc. (TSX:WEF) is 13.945388.  This is calculated by dividing the five year average ROIC by the Standard Deviation of the 5 year ROIC.  The ROIC 5 year average is calculated using the five year average EBIT, five year average (net working capital and net fixed assets).  The ROIC 5 year average of Western Forest Products Inc. (TSX:WEF) is 0.184287.

The Gross Margin Score is calculated by looking at the Gross Margin and the overall stability of the company over the course of 8 years. The score is a number between one and one hundred (1 being best and 100 being the worst). The Gross Margin Score of Western Forest Products Inc. (TSX:WEF) is 15.00000. The more stable the company, the lower the score. If a company is less stable over the course of time, they will have a higher score.

Volatility
Stock volatility is a percentage that indicates whether a stock is a desirable purchase.  Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year.  The Volatility 12m of Western Forest Products Inc. (TSX:WEF) is 30.546200.  This is calculated by taking weekly log normal returns and standard deviation of the share price over one year annualized.  

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The lower the number, a company is thought to have low volatility.  The Volatility 3m is a similar percentage determined by the daily log normal returns and standard deviation of the share price over 3 months.  The Volatility 3m of Western Forest Products Inc. (TSX:WEF) is 31.322400.  The Volatility 6m is the same, except measured over the course of six months.  The Volatility 6m is 41.395800.

MF Rank

The MF Rank (aka the Magic Formula) is a formula that pinpoints a valuable company trading at a good price. The formula is calculated by looking at companies that have a high earnings yield as well as a high return on invested capital. The MF Rank of Western Forest Products Inc. (TSX:WEF) is 1989. A company with a low rank is considered a good company to invest in. The Magic Formula was introduced in a book written by Joel Greenblatt, entitled, “The Little Book that Beats the Market”.

The Q.i. Value of Western Forest Products Inc. (TSX:WEF) is 8.00000.  The Q.i. Value is a 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.

Turning to Free Cash Flow Growth (FCF Growth), this is the free cash flow of the current year minus the free cash flow from the previous year, divided by last year’s free cash flow.  The FCF Growth of Western Forest Products Inc. (TSX:WEF) is -0.672650.  Free cash flow (FCF) is the cash produced by the company minus capital expenditure.  This cash is what a company uses to meet its financial obligations, such as making payments on debt or to pay out dividends.  The Free Cash Flow Score (FCF Score) is a helpful tool in calculating the free cash flow growth with free cash flow stability – this gives investors the overall quality of the free cash flow.  

Value Composite
The Value Composite One (VC1) is a method that investors use to determine a company’s value.  The VC1 of Western Forest Products Inc. (TSX:WEF) is 8.  A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company.  

The VC1 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, and price to earnings.  Similarly, the Value Composite Two (VC2) is calculated with the same ratios, but adds the Shareholder Yield.  The Value Composite Two of Western Forest Products Inc. (TSX:WEF) is 5.

ERP5 Rank

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 Western Forest Products Inc. (TSX:WEF) is 1560. The lower the ERP5 rank, the more undervalued a company is thought to be.

Investors often hear the saying “buy low, sell high”. This may seem highly obvious to anybody looking to get into the stock market. Even though investors typically know they should do this, novices tend to do just the opposite, buy high and sell low. Often times, amateur investors will get carried away when a stock is trending higher. They may attempt to get in on the stock after a big move with hopes of the stock going higher and an overall thought that relates to the fear of missing out. Often times, investors will find themselves in a precarious situation when this occurs. They might have taken a chance on a stock that maybe was too good to be true. Investors may regret buying after the big move when the price has far exceeded the underlying value. Closely watching the fundamentals may help investors avoid getting into sticky situations such as buying too high.

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