Value Composite Two

Value Composite Two (VC2) is a way of ranking companies by valuation developed by James O’Shaughnessy and explained in the latest edition of his excellent book What Works on Wall Street: The Classic Guide to the Best-Performing Investment Strategies of All Time

The Value Composite 2 factor is calculated using the following six valuation ratios:

  • Price to book value
  • Price to sales
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) to Enterprise value (EV)
  • Price to cash flow
  • Price to Earnings
  • Shareholder Yield

 

Value Composite Two is calculated the same as Value Composite One (VC1) but it adds an additional ratio, Shareholder Yield.

 

How to use the ratio

Available as a screening ratio: Yes

Available as an output column ratio: Yes

 

How to select the best ranked Value Composite Two companies

To find companies with the best Value Composite Two ranking set the slider from 0% to 10%.

In the screener the VC2 has a value of between 0 (undervalued company) and 100 (expensive or overvalued company).

 

More information and Value Composite Two back test

You can find more information (including back test information) here: How and why to implement a Value Composite Two investment strategy world-wide

 

Click here to start using the Value Composite Two investment strategy in your portfolio NOW!