OPEN-SOURCE SCRIPT
Greenblatts Magic Formula - A multiple approach
This indicator is supposed to help find undervalued stocks. Inspired by Joel Greenblatt's strategy where he ranks stocks with the lowest EV/EBIT and the highest ROC. Inspired by the ERP5 strategy I have added Earnings Yield together with ROC.
My approach and how I use the indicator is to see Magic Formula score as a multiple, rather than ranking the numbers between different stocks. Like P/E for comparison. Different kinds of companies trades at different multiples so you have to compare the current MF Score in relation to historical MF Score to get an idea if it truly is undervalued. You also want to see that price actually reacts to a low MF Score.
As i general rule for myself I stay away from companies with EV/EBIT above 13 and generally want to see MF Score below 6-7. A company trading at a negative MF Score indicates that the company may be heavily undervalued.
The strategy is simple. Look for companies which might be undervalued. Compare the current MF score to it's history. If it's trading near a previous bottom it indicates that the company might be undervalued. You can also use the MF EMA to see a more smooth curve to interpret the multiple.
My approach and how I use the indicator is to see Magic Formula score as a multiple, rather than ranking the numbers between different stocks. Like P/E for comparison. Different kinds of companies trades at different multiples so you have to compare the current MF Score in relation to historical MF Score to get an idea if it truly is undervalued. You also want to see that price actually reacts to a low MF Score.
As i general rule for myself I stay away from companies with EV/EBIT above 13 and generally want to see MF Score below 6-7. A company trading at a negative MF Score indicates that the company may be heavily undervalued.
- Red line = EV/EBIT
- Green line = ROC + EY / 2
- Yellow line = "MF Score" EVEBIT - (ROC+EY/2)
- Blue line = The 50 EMA of MF score
The strategy is simple. Look for companies which might be undervalued. Compare the current MF score to it's history. If it's trading near a previous bottom it indicates that the company might be undervalued. You can also use the MF EMA to see a more smooth curve to interpret the multiple.
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オープンソーススクリプト
TradingViewの精神に則り、このスクリプトの作者はコードをオープンソースとして公開してくれました。トレーダーが内容を確認・検証できるようにという配慮です。作者に拍手を送りましょう！無料で利用できますが、コードの再公開はハウスルールに従う必要があります。
免責事項
この情報および投稿は、TradingViewが提供または推奨する金融、投資、トレード、その他のアドバイスや推奨を意図するものではなく、それらを構成するものでもありません。詳細は利用規約をご覧ください。