Equity Style Box
The Equity Style Box is a nine-box matrix that displays the weighted portfolio stock and mutual fund investment methodology and the size of the companies in which they invest. Combining these two variables offers a broad view of a portfolio's equity holdings and risk.
Market Cap $MM
Morningstar defines the overall size of a stock separate account's portfolio as the geometric mean of the market capitalization for all of the stocks it owns. It's calculated by raising the market capitalization of each stock to a power equal to that stock's stake in the separate account. The resulting numbers are multiplied together to produce the geometric mean of the market caps of the stocks in the portfolio, which is reported as geometric average 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 separate accounts, this data point is calculated by taking an asset-weighted average of the earnings yields (E/P) of all the stocks in the separate account and then taking the reciprocal of the result.
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 separate accounts, this data point is calculated by taking an asset-weighted average of the book value yields (B/P) of all the stocks in the separate account and then taking the reciprocal of the result.
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 separate accounts, this data point is calculated by taking an asset-weighted average of the sales yields (S/P) of all the stocks in the separate account and then taking the reciprocal of the result.
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 separate accounts, this data point is calculated by taking an asset-weighted average of the cash flow yields (C/P) of all the stocks in the separate account and then taking the reciprocal of the result.
Net Margin %
Listed for the trailing twelve months, net margin is net income per share divided by its revenue per share and indicates the percentage profit the company earns for each dollar of revenue it receives. High profit margins are generally preferable to low margins.
Net margin for a separate account 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 separate account 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 separate account 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 separate account 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 in the representative holdings of a separate account. This figure is meant to be a measure of portfolio risk. Specifically, the lower the figure, the more concentrated the separate account is in a few companies or issues, and the more the separate account 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 separate account representative holdings. It does not include a separate account’s short positions.
% Assets in Top 10 Holdings
The aggregate assets, expressed as a percentage, of the separate account's top 10 representative holdings. This figure is meant to be a measure of portfolio risk. Specifically, the higher the percentage, the more concentrated the separate account is in a few companies or issues, and the more the separate account is susceptible to the market fluctuations in these few holdings. The figure is calculated from the most recent available separate account holdings.
Portfolio Date
The date of the most recent portfolio of the separate account, taken from representative holdings information provided to Morningstar by the asset management firm running the separate account.