ValueMCap
Filter
Enterprise Value / Market Cap Ratio Filter (ValueMCap)
Find companies by leverage, using the enterprise value to market cap ratio, in real time, with Trade Ideas Streaming Alerts (Scanner) and Top Lists (Screeners). The EV-to-Market Cap ratio compares enterprise value with market cap. A smaller ratio suggests less debt relative to equity; a larger one suggests more leverage.
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Seeing a balance-sheet screen hit a live mover as it happens helps active traders. The Enterprise Value / Market Cap Ratio filter value changes once a day, so Streaming Alerts apply it the moment each alert fires: you see only the stocks that pass it, while they are moving.
How Trade Ideas finds it: set the minimum value to 20 to see only stocks with an enterprise value to market cap ratio of at least 20/1. See Trade Ideas plans and pricing to run it live.
How the Enterprise Value / Market Cap Ratio filter works
The EV-to-Market Cap ratio provides insights into the financial structure and leverage of a company. A smaller ratio suggests a stronger company with less debt relative to its equity, while a larger ratio indicates higher leverage and potentially greater financial risk.
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Enterprise Value (EV):
Enterprise value represents the total value of a company, including its equity, debt, and cash holdings. It provides a more comprehensive view of a company's worth compared to market capitalization alone.
EV is calculated by adding a company's market capitalization (the total value of its outstanding shares) to its total debt, minority interest, and preferred shares, then subtracting its cash and cash equivalents.
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Market Capitalization (Market Cap):
Market capitalization is the total value of a company's outstanding shares of stock. It is calculated by multiplying the current share price by the total number of outstanding shares.
Market cap provides a measure of the company's equity value as perceived by the stock market.
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Enterprise Value to Market Cap Ratio:
This ratio compares the enterprise value of a company to its market capitalization. It is calculated by dividing the enterprise value by the market cap.
A smaller value of this ratio typically suggests that the company is stronger. This is because a lower ratio indicates that the company's market capitalization (equity value) is relatively higher compared to its enterprise value (which includes debt).
On the other hand, a larger value of this ratio indicates that the company is more leveraged. A higher ratio implies that a significant portion of the company's total value is represented by debt rather than equity.
Enterprise Value / Market Cap Ratio filter settings
Configuring the "Enterprise Value Market Cap Ratio" filter is simple and can be done within the Window Specific Filters Tab of the Configuration Window in your Alert or Top List (Screener) window.
Here's how to set up the filter in your configuration window:
- Set the minimum value to 20 to see only stocks with an enterprise value to market cap ratio of at least 20/1.
Using the Enterprise Value Market Cap Ratio Filter
The "Enterprise Value Market Cap Ratio" filter can be used in various trading strategies, including:
- Contrarian Strategy: Identify companies with relatively low EV-to-Market Cap ratios compared to their industry peers. Companies with low ratios may be undervalued, indicating potential buying opportunities. Conduct thorough fundamental analysis to ensure there are no underlying issues causing the undervaluation.
- Pairs Trading: Identify pairs of companies within the same industry or sector. Compare their EV-to-Market Cap ratios to find discrepancies. Take long positions in companies with relatively low ratios and short positions in companies with relatively high ratios, assuming the ratios will converge.
- Event-Driven Strategy: Monitor corporate events such as mergers, acquisitions, or divestitures. Evaluate the impact of these events on a company's EV-to-Market Cap ratio. Take positions based on expectations of how the event will affect the ratio and stock prices.
Filters to combine with Enterprise Value / Market Cap Ratio
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FAQ
What does a high EV to market cap ratio mean?
Add the Enterprise Value / Market Cap Ratio filter (ValueMCap) to a Trade Ideas Streaming Alerts or Top List (Screener) window. Set the minimum value to 20 to see only stocks with an enterprise value to market cap ratio of at least 20/1.
What is the Enterprise Value / Market Cap Ratio filter?
The EV-to-Market Cap ratio compares enterprise value with market cap. A smaller ratio suggests less debt relative to equity; a larger one suggests more leverage.
How do I find highly leveraged companies?
Use the Enterprise Value / Market Cap Ratio filter (ValueMCap) in Trade Ideas Streaming Alerts and Top Lists to find companies by leverage, using the enterprise value to market cap ratio. The EV-to-Market Cap ratio compares enterprise value with market cap.