Latest news with #Robo-Analyst
Forbes
30-04-2025
- Business
- Forbes
Finding Quality In A Volatile Market: Primerica (PRI)
Rising stock market chart on a trading board background. The incredibly long run of stability in capital markets has come to an end. No longer, as Ray Dalio points out, can investors make easy money betting on the stock market going up. Change can be scary, but it can also create opportunity, especially as the market gets more efficient. Now is the time when diligence matters most. And, there's no better proof that diligence makes money for investors than the performance of the Bloomberg New Constructs Very Attractive Stocks Index, which has strongly out-performed he S&P 500 all year. It beat the S&P 500 by over 9% in 1Q2025. Real alpha comes from going the extra mile and getting critical data that no one else has. My Most Attractive Stocks Model Portfolio is proof that such research creates real alpha. I scour the entire market to find the gems in this Model Portfolio. I leverage my firm's research to deliver you those companies with truly strong fundamentals and undervalued stock prices. Today, I'm sharing a stock pick from my Most Attractive Stocks Model Portfolio. This pick comes with a concise summary that gives you insight into the rigor of quality research and my approach to picking stocks. I'm proud to share my work, and I want to help investors when they need it most. Primerica Inc (PRI) has grown revenue and net operating profit after tax (NOPAT) by 9% and 18% compounded annually since 2014, respectively. Primerica's NOPAT margin increased from 14% in 2014 to 30% in 2024 while its invested capital turns rose from 0.9 to 1.0 over the same time. Rising NOPAT margins and invested capital turns drive Primerica's return on invested capital (ROIC) from 11% in 2014 to 30% in 2024. Figure 1: Primerica's Revenue and NOPAT Since 2014 PRI Revenue & NOPAT 2014-2024 At its current price of $249/share, PRI has a price-to-economic book value (PEBV) ratio of 0.7. This ratio means the market expects Primerica's NOPAT to permanently decline by 30% from 2024 levels. This expectation seems overly pessimistic for a company that has grown NOPAT by 18% compounded annually over the last decade and 20% compounded annually over the past five years. Even if Primerica's NOPAT margin falls to 20% (below 2024 NOPAT margin of 30% and equal to five-year average margin) and the company grows revenue by just 5% (below ten-year compound annual growth rate of 9%) compounded annually through 2034, the stock would be worth $309/share today – a 24% upside. In this scenario, Primerica's NOPAT would grow just 1% compounded annually through 2034. Should Primerica grow profits more in line with historical levels, the stock has even more upside. Below are specifics on the adjustments I made based on Robo-Analyst findings in Primerica's 10-K: Income Statement: I made under $600 million in adjustments, with a net effect of removing over $400 million in non-operating expense. Balance Sheet: I made just under $1 billion in adjustments to calculate invested capital with a net increase of under $200 million. One of the most notable adjustments was for other comprehensive income. Valuation: I made just under $100 million in adjustments, all of which decreased shareholder value. The most notable adjustment was for total debt.
Bloomberg
18-03-2025
- Business
- Bloomberg
Footnote Season: Uncovering Hidden Value in Company Financials
Understanding a company's financial position requires more than just analyzing revenue growth, profitability, and cash flow. While these traditional metrics offer a snapshot, they often overlook critical insights buried in footnotes and disclosures. To gain a true financial perspective, investors must look beyond the income statement and uncover the hidden details that impact real earnings. Join Bloomberg and New Constructs for an exclusive webinar exploring how AI-driven financial analysis enhances accounting transparency to reveal underestimated earnings. Discover how Bloomberg Indices integrates New Constructs' proprietary data to develop systematic strategies that identify companies whose true financial strength is often overlooked—creating a unique opportunity for accounting alpha. CEO of New Constructs David Trainer, CEO of New Constructs, is a Wall Street veteran and corporate finance expert specializing in AI-driven financial analysis. With a career spanning equity research at Credit Suisse First Boston and Epoch Partners (later acquired by Goldman Sachs), he has pioneered AI-powered stock ratings, financial analytics, and valuation models that uncover hidden insights in company filings. His firm's Robo-Analyst technology, validated by research from the Journal of Financial Economics, Ernst & Young, and Harvard Business School, has been proven superior in predicting earnings and stock performance. A former FASB Investors Advisory Committee member and author of Modern Tools for Valuation (Wiley Finance, 2010), Trainer frequently appears in media to share insights on AI, financial markets, and investment strategies. Mike Pruzinsky Senior Global Equity Product Manager Bloomberg Indices Michael Pruzinsky is a senior global equity product manager for Bloomberg Indices. Based in New York, Michael has over 15 years of experience working with the buy-side, and is responsible for overseeing index development, go-to-market, and product strategy. He has created and launched hundreds of indices including the Bloomberg Magnificent 7 Index. Previously, he worked in several client facing roles including Bloomberg's portfolio analytics & risk team that supported the transition from Barclays POINT to Bloomberg PORT. Michael holds a B.A. in Business Economics from Brown University. Steve Hou Index & ESG Research Bloomberg Steve Hou is a researcher on Bloomberg's Index & Portfolio Research team. His research covers systematic equity and multi-asset investment strategies, which he applies in close collaboration with the Multi-Asset Index Product team to produce investable index products. Prior to joining Bloomberg, Steve was a quantitative researcher at AQR Capital Management LLC, where he worked on systematic stock selection and tax efficient investment strategies. Steve graduated with a PhD in Financial Economics from the University of Michigan in 2018. He previously completed graduate and undergraduate studies from ETH Zurich and the University of Virginia.
