Overall quality factor
factor.formula
Price/Book Value =
The formula is a variation of the Gordon growth model, linking stock prices to book value and explaining valuation levels through dividend yield, required return and growth rate.
Price/Book Value =
This formula further breaks down the dividend yield into the product of profitability (Profit/BookValue) and dividend rate (Dividend/Profit) to provide a clearer understanding of the source of dividends.
Price/Book Value =
This formula is further simplified by replacing the split result of the dividend yield with the product of profitability and dividend rate, and highlighting the relationship with the required rate of return and growth rate.
In the formula:
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The current market price of the stock.
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The book value of the stock, that is, the company's net assets.
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Dividends paid by a company.
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A company's earnings, usually referred to as net profit.
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The investor's required rate of return on the stock, also known as the discount rate, reflects the risk premium.
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The expected future growth rate of a company, usually referring to the growth rate of earnings or dividends.
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The company's profitability indicators, such as ROE, ROA, etc.
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The company's dividend rate, that is, the proportion of dividends to profits.
factor.explanation
The comprehensive quality factor tends to show better risk control during economic recessions, increased market volatility and bear markets, which shows that high-quality companies are more resilient in adversity. This factor can be used as an important basis for measuring the long-term fundamental quality of a company and screening out stocks with investment value. This factor decomposes the Gordon growth model into three core dimensions: profitability, growth and capital stability, and quantifies it based on multiple sub-indicators, avoiding the limitations of a single indicator, thereby providing a more comprehensive and objective assessment of company quality.