NTAP

The band is the interquartile range of every estimator that could run on NTAP’s filings: the median P/E, P/S, P/B and P/FCF this stock has actually traded at over 19years of history applied to today’s fundamentals, a two-stage discounted-cash-flow estimate. With four or more estimators we take the interquartile range, so a single wild reading cannot define the band; with two or three we show the full spread, because trimming the tails off three points does not remove noise, it manufactures confidence. We publish a range rather than one number because the estimators genuinely disagree, and averaging that disagreement away would hide the most useful part.

Valuation labels describe only where the price sits against that band:

• Deep Discount — price is more than 30% below the bottom of the band.
• Discount — price is below the bottom of the band.
• Fairly Priced — price sits inside the band, i.e. about where this company’s own fundamentals put it.
• Premium — price is above the top of the band.
• Steep Premium — price is more than 30% above the top of the band.

Filing health is computed separately and never looks at price. It reads the Piotroski F-Score, the Altman Z-Score and the Beneish M-Score straight from the filings: Sound means none of them flagged, Mixed means one moderate flag, Weak means a distress or manipulation flag, or several softer ones. For banks and insurers it reads Not assessed: all three scores were built on non-financial companies and their authors excluded financials, so for a balance-sheet business they measure the shape of the business rather than its health. Keeping the two axes apart is deliberate — a cheap company with weak filings is a very different object from a cheap company with sound ones, and a single blended verdict would hide which you are looking at.

Why some estimators are skipped. A multiple can be arithmetically computable and still meaningless. GAAP depreciation crushes REIT earnings, so we do not price a REIT off P/E; revenue and free cash flow are not comparable measures for a bank or an insurer, so those are dropped too. We would rather show you the estimators we trust and name every one we withheld, with the reason, than quietly fold in a number we do not believe.

The inputs are NTAP’s own SEC filings and our price history; the formulas are stated on this page. There is no proprietary black box, and there is nothing here you have to take on trust.

The score is passed over computable, not passed out of five. If only three tests could be run on NTAP’s filings, the score is out of three and the other two are listed with the reason they were skipped. Scoring a skipped test as a failure would punish a company for how its industry reports, and scoring it as a pass would flatter one.

Labels come from that ratio:

• Well Covered — 90% or more of the computable tests passed.
• Covered — 65% or more.
• Thin — 40% or more.
• Strained — below 40%.

Below three computable tests we publish no label at all and show the individual results instead. A summary drawn from one or two tests is not a summary.

Free cash flow coverage carries the most weight in practice, because dividends are paid in cash and free cash flow is the cash actually available to pay them. The earnings payout ratio is the better-known test but the weaker one — earnings are an accounting figure, dividends are not. Where the two disagree, believe the cash.

Why tests get skipped.A REIT gets no earnings payout ratio: GAAP depreciation on appreciating property understates a REIT’s distributable earnings, which is exactly why the industry reports FFO and why REITs are required to distribute most of their taxable income. Banks and insurers get no leverage test, because deposits are debt and structurally high leverage is what a balance-sheet business is, not a warning sign.

The biggest limitation, stated plainly. The coverage tests read a single fiscal year, and one year of cash flow is far more volatile than a dividend record. A legal settlement, a tax payment or an acquisition can sink coverage in a year that says nothing about the dividend. Where a weak year contradicts a long unbroken record, we say so above rather than letting the harsher number stand alone — but you should still check what happened in that specific year.

The streak is the weakest test here, and it is deliberately listed last. Every dividend that was ever cut had an unbroken streak right up until the year it was cut. A freeze does not break the run — a company that holds its dividend flat through a bad year has not cut it — so raises are counted separately, and a long flat run cannot pass itself off as dividend growth.