Equity Style Box
The Equity Style Box is a nine-square grid that classifies securities by size along the vertical axis and by value and growth characteristics along the horizontal axis. Different investment styles often have different levels of risk and lead to differences in returns. Therefore, it is crucial that investors understand style and have a tool to measure their style exposure.
Market Cap $Mil
The current stock-market value of a company's equity, in millions. It is calculated by multiplying the current share price by the number of shares outstanding as of the most recently completed fiscal quarter. Market cap is an often-used indicator of a stock's size. Morningstar divides all global stocks into seven markets or "style zones" (US, Canada, Europe, Latin America, Asia ex-Japan, Japan, and Australia/NZ). Morningstar considers the top 40% of the capitalization of each market to be giant-cap, the following 30% to be large-cap, the following 20% to be mid-cap, the following 7% to be small-cap and the remainder to be micro-cap.
Price/Prospective Earnings
Price/projected earnings for a stock is the ratio of the company’s most recent month-end share price to the company’s estimated earnings per share (EPS) for the current fiscal year. If a third-party estimate for the current year EPS is not available, Morningstar will calculate an internal estimate based on the most recently reported EPS and average historical earnings growth rates.
For portfolios, this data point is calculated by taking an asset-weighted average of the earnings yields (E/P) of all the stocks in the portfolio and then taking the reciprocal of the result.
Note: This is one of the five value factors used to calculate the Morningstar Equity Style Box.
Price/Book
Price/book (projected) for a stock is the ratio of the company’s most recent month-end share price to the company’s estimated book value per share (BPS) for the current fiscal year. Book value is the total assets of a company, less total liabilities. Morningstar calculates internal estimates for the current year BPS based on the most recently reported BPS and average historical book value growth rates.
For portfolios, this data point is calculated by taking an asset-weighted average of the book value yields (B/P) of all the stocks in the portfolio and then taking the reciprocal of the result.
Note: This is one of the five value factors used to calculate the Morningstar Equity Style Box.
Price/Sales
Price/sales (projected) for a stock is the ratio of the company’s most recent month-end share price to the company’s estimated sales per share (SPS) for the current fiscal year. Morningstar calculates internal estimates for the current year SPS based on the most recently reported SPS and average historical sales growth rates.
For portfolios, this data point is calculated by taking an asset-weighted average of the sales yields (S/P) of all the stocks in the portfolio and then taking the reciprocal of the result.
Note: This is one of the five value factors used to calculate the Morningstar Equity Style Box.
Price/Cash Flow
Price/cash flow (projected) for a stock is the ratio of the company’s most recent month-end share price to the company’s estimated cash flow per share (CPS) for the current fiscal year. Cash flow measures the ability of a business to generate cash and it acts as a gauge of liquidity and solvency. Morningstar calculates internal estimates for the current year CPS based on the most recently reported CPS and average historical cash flow growth rates.
For portfolios, this data point is calculated by taking an asset-weighted average of the cash flow yields (C/P) of all the stocks in the portfolio and then taking the reciprocal of the result.
Note: This is one of the five value factors used to calculate the Morningstar Equity Style Box.
Dividend Yield %
Dividend yield (projected) for a stock is the percentage of its stock price that a company is projected to pay out as dividends. It is calculated by dividing estimated annual dividends per share (DPS) for the current fiscal year by the company’s most recent month-end stock price. Morningstar calculates internal estimates for the current year DPS based on the most recently reported DPS and average historical dividend growth rates.
For portfolios, this data point is calculated by taking an asset-weighted average of the dividend yields of all the stocks in the portfolio.
Note: This is one of the five value factors used to calculate the Morningstar Equity Style Box.
Net Margin %
Net Margin is a measure of profitability. It is equal to annual net income divided by revenues from the same period for the past five fiscal years. The resulting figure is then multiplied by 100. For a mutual fund or a subaccount Net Margin represents a weighted median figure such that approximately 50% of the domestic stocks in the portfolio will have a greater Net Margin and roughly 50% of these domestic stocks will have a lower Net Margin than the weighted median.
ROA %
Listed for the trailing twelve months, return on assets is net income per share divided by the per-share book value of its assets and measures how efficiently a company is able to use its assets to generate profits. Stocks with high returns on assets are generally preferable to those with low returns on assets. Note, however, that return on asset figures can be misleading owing to accounting conventions. Because asset values on a company's balance sheet are based on historic cost accounting, they may bear little resemblance to their current replacement value.
Return On Assets for a mutual fund represents a weighted median figure such that approximately 50% of the domestic stocks in the portfolio will have a greater ROA and roughly 50% of these domestic stocks will have a lower ROA than the weighted median.
ROE %
Listed for the trailing twelve months, return on equity is net income per share divided by the per-share book value of its equity and indicates the percentage profit the company earns for each dollar of equity on the books. Stocks with high returns on equity are generally preferable to those with low returns on equity. Note, however, that return on equity figures can be misleading owing to accounting conventions. Because equity values on a company's balance sheet are based on historic cost accounting, they may bear little resemblance to current market valuations.
Return on equity for a mutual fund represents a weighted median figure such that approximately 50% of the domestic stocks in the portfolio will have a greater ROE and roughly 50% of these domestic stocks will have a lower ROE than the weighted median.
Debt % to Total Capitalization
Listed for the trailing twelve months, this ratio is calculated by dividing long-term debt (excluding other liabilities) by total capitalization (the sum of common equity plus preferred equity plus long-term debt). This figure is not provided for financial companies. Debt % to Total Capitalization for a mutual fund represents a weighted median figure such that approximately 50% of the domestic stocks in the portfolio will have a greater debt-to-total-cap and roughly 50% of these domestic stocks will have a lower debt-to-total-cap than the weighted median.
Total Number of Holdings
The total number of different holdings of a fund. This figure is meant to be a measure of portfolio risk. Specifically, the lower the figure, the more concentrated the fund is in a few companies or issues, and the more the fund is susceptible to the market fluctuations in these few holdings. This figure also provides a context for the importance of % assets in top 10 holdings. The figure is calculated from the most-recent available fund holdings. It does not include a fund’s short positions.
% Assets in Top 10 Holdings
The aggregate assets, expressed as a percentage, of the fund's top 10 portfolio holdings. This figure is meant to be a measure of portfolio concentration and risk. Specifically, the higher the percentage, the more concentrated the fund is in a few companies or issues, and the more the fund is susceptible to the market fluctuations in these few holdings.
Portfolio Date
The date of the most recent portfolio of the exchange-traded fund.