The following are today’s upgrades for Validea’s Earnings Yield Investor model based on the published strategy of Joel Greenblatt. This value model looks for companies with high return on capital and earnings yields.
MERCK & CO., INC. (MRK) is a large-cap growth stock in the Biotechnology & Drugs industry. The rating according to our strategy based on Joel Greenblatt changed from 70% to 80% based on the firmâs underlying fundamentals and the stockâs valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
Company Description: Merck & Co., Inc. is a global healthcare company. The Company offers health solutions through its prescription medicines, vaccines, biologic therapies and animal health products. It operates through four segments: Pharmaceutical, Animal Health, Healthcare Services and Alliances. The Company’s Pharmaceutical segment includes human health pharmaceutical and vaccine products marketed either directly by the Company or through joint ventures. Human health pharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatment of human disorders. The Company sells its human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government agencies and managed healthcare providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. Vaccine products consist of preventive pediatric, adolescent and adult vaccines, primarily administered at physician offices.
The following table summarizes whether the stock meets each of this strategy’s tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy’s criteria.
| EARNINGS YIELD: | NEUTRAL |
| RETURN ON TANGIBLE CAPITAL: | NEUTRAL |
| FINAL RANKING: | FAIL |
Detailed Analysis of MERCK & CO., INC.
HD SUPPLY HOLDINGS INC (HDS) is a mid-cap growth stock in the Electronic Instr. & Controls industry. The rating according to our strategy based on Joel Greenblatt changed from 80% to 90% based on the firmâs underlying fundamentals and the stockâs valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
Company Description: HD Supply Holdings, Inc. is an industrial distributor in North America. The Company’s segments include Facilities Maintenance, Construction & Industrial-White Cap, and Corporate. It operates through approximately 270 branches and 44 distribution centers in the United States and Canada. It serves contractors, government entities, maintenance professionals, home builders and industrial businesses. Tts range of product lines and services included approximately 845,000 stock-keeping units (SKUs) of products, brands, as well as value-add services supporting the entire life-cycle of a project from infrastructure and construction to maintenance, repair and operations. The Company’s value-add services include customer training, material and product fabrication, kitting, jobsite delivery, will-call pickup options, as well as onsite managed inventory, online material management and emergency response capabilities.
The following table summarizes whether the stock meets each of this strategy’s tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy’s criteria.
| EARNINGS YIELD: | NEUTRAL |
| RETURN ON TANGIBLE CAPITAL: | NEUTRAL |
| FINAL RANKING: | PASS |
Detailed Analysis of HD SUPPLY HOLDINGS INC
More details on Validea’s Joel Greenblatt strategy
About Joel Greenblatt: In his 2005 bestseller The Little Book That Beats The Market, hedge fund manager Joel Greenblatt laid out a stunningly simple way to beat the market using two — and only two — fundamental variables. The “Magic Formula,” as he called it, produced back-tested returns of 30.8 percent per year from 1988 through 2004, more than doubling the S&P 500’s 12.4 percent return during that time. Greenblatt also produced exceptional returns as managing partner at Gotham Capital, a New York City-based hedge fund he founded. The firm averaged a remarkable 40 percent annualized return over more than two decades.
About Validea: Validea is an investment research service that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
