The Investment Management Team performs rigorous financial analysis in an effort to identify growing companies that are trading at attractive prices relative to their sector peers. We typically seek to invest in Growth at a Reasonable Price (GARP) stocks, and the team pays close attention to a host of financial factors including Price/Earnings to Growth (PEG)1, Return on Equity (ROE)2 and Return on Assets (ROA)3. The Investment Management Team also focuses on companies’ debt, utilizing multiple metrics to measure a company’s financial health. Leverage ratios such as Debt to Equity4 and Interest Coverage5 are used to determine a company’s ability to meet its financial obligations.
Pax World relies heavily on our own analysts’ proprietary research, including meeting regularly with the management of companies we may be interested in investing in. We also draw considerable insight from independent research and data services providers like BCA, ISI, Gimmie Credit, Wolfe Trahan, Stratecon, FactSet and Bloomberg, as well as numerous major sell-side research firms.
Fixed income analysis varies by fund. The fixed income portion of the Balanced Fund evaluates such factors as credit quality and duration, concentrating on short- and intermediate-term bonds. The High Yield Bond Fund performs in-depth credit analysis, building proprietary financial models for each of the securities in the portfolio.
1Price-to-Earnings Growth Ratio represents the value stock market analysts and investors place on a firms earnings expectations compared to what it has earned in the past.
2Return-on-Equity is a measure of how much a company earns within a specific time period in relation to the amount that has been invested in its common stocks.
3Return on Assets is an indicator of how profitable a company is relative to its total assets, and is calculated by dividing a company's annual earnings by its total assets.
4Debt to Equity is a measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.
5Interest Coverage Ratio is used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes of one period by the company's interest expenses of the same period.