A comparison between Piotroski’s FSCORE and Net Current Asset Value (NCAV) : a study of undervalued stocks during 2017-2022

Abstract

Financial investments in various companies play a very important role in modern life. Every year the importance of investing money is growing, most people notice that inflation is happening. To protect themselves, people should not keep money just like that, they should invest it. One of the important tasks is to determine where to invest and how to understand which strategies should be followed. As this thesis deals with the subjects of value investing, the purpose of this work is to analyze companies listed on the LSE to try to find undervalued stocks. The main research goal of this dissertation was to figure out how to modernize FSCORE strategy for investing in undervalued companies. To do this, several companies were taken from the London Stock Exchange. They were also analyzed for the number of funds and analyzed earnings per share for 2018,2019,2020,2021,2022 years. All data was collected from the financial statements of companies, as well as from websites investing.com and other sites. It was very important to compare FSCORE strategy with the NCAV (Net Present Value of Assets) method for the potential possibility of combining strategies. For each share, such indicators of the company's performance were calculated, such as cash flow , net income, total assets, total liabilities, EBIT (Earnings before interest, taxes, depreciation). In this study , these inventory performance indicators are used as dependent variables .There were also small studies conducted on how COVID-19 influenced London Stock Exchange (LSE), as well as companies listed there and selected by the author for research. Thus, the general essence of the thesis is as follows: the more strategies and data about the company, the better an investment strategy can be used and the more profit can be obtained.