In addition to Jitta Score, Jitta Signs and Jitta Factors have been used by investors to figure out the strengths and weaknesses of a business.
While Jitta Score indicates an overall quality of a business, Jitta Factors score a business in each of the 5 important attributes that make a company wonderful: Growth Opportunity, Recent Business Performance, Financial Strength, Return to Shareholders, and Competitive Advantage.
Next, Jitta Signs show both positive and negative trends detected within company financials. You can quickly assess business potential without examining the financial statements in detail. A green Jitta Sign indicates an improvement or a positive trend whereas a red one indicates decreasing or deteriorating performance.
Both of the Jitta indicators have recently undergone an update that would offer you even more insights into stock fundamentals in a shorter amount of time, including:
- New Jitta Signs for assessing financial stocks.
- Performance consistency-focused Jitta Factors updated in accordance to our latest algorithm update.
New Jitta Signs for financial stocks
About 40% of Warren Buffett’s portfolio consists of financial stocks.
Sure, the past 2-3 years have seen tech stocks competing head to head with financial ones for the largest share in Buffett’s portfolio. But we all know there’s always a special place in Buffett’s heart for those such as banks and insurance companies.
Because, as much as we hate to admit, money makes the world go ‘round. No matter how fast the world changes, financial services will always be needed, in one form or another. Plus, financial stocks are generally profitable in the long run thanks to the typically expanding economy.
And that’s why Buffett usually snatches financial stocks during a crisis when they are one of the first to plummet. As this Covid-19 crisis has shown, prices of financial stocks have dipped below their fair values, which means it is an opportunity for investors to buy this more or less “immortal” business.
But financial businesses are complicated. You can’t make sense of their financial reports the same way you decipher other businesses. For example, banks don’t earn revenues by selling goods, but from debt. In that sense, debt, for them, is an asset.
With that in mind, we’ve added more indicators crucial to determine the health of a financial business to Jitta Signs, so you can get a sense of what the business is like at a mere glance. Here’s a list of the new indicators and what they can tell you about a financial business:
- Total deposit show the increase or decrease of bank’s totol reserves
- Loan to deposit assesses a bank’s liquidity
- Net interest margin is a measure of the net return on the bank’s earning assets
- Investment yield (ROI) measures the rate of return from an investment on insurance sector
- Loan yield measures the percentage yield earned by Lender
As a bonus, we’ve also thrown in a few highly-requested indicators into this update as well. These are the indicators investors are paying a lot of attention to right now to figure out the survival chance of a business.
- Interest coverage ratio determines how easily a company can pay their interest expenses on outstanding debt
- Cash conversion cycle measures the company’s liquidity
- SG&A to sales indicates the company’s efficiency how well a company is able to manage its non-operating expense and generate sales
The Updated Jitta Factors
At the beginning of this year, we announced an update to Jitta’s algorithm that would make Jitta Score and Jitta Line more robust indicators of business fundamentals and value.
Since then, we’ve been working on applying the same improvements to Jitta Factors, namely, putting more emphasis on performance consistency to make sure that companies with steady growth will receive higher scores. That means Jitta Factors now offer an even more precise reflection of long-term competitiveness and predictable future.
Hopefully, these two updates will help you save even more time discovering “a wonderful company at a fair price” during this Covid crisis. We look forward to seeing your portfolio recover like a SpaceX rocket soaring towards the International Space Station. This is a historic moment that will lead to an exciting future for us all.