The QMG Insight product has been developed as a fundamental value screener based on a vast range of underutilised global economic datasets and constructed in a way that makes sense for investors. The system offers a graphical insight into the performance of a comprehensive set of industrial, retail, construction, distribution and other economic sectors. The system spans the US, UK, Japanese, German, French and other global regions.
The data is drawn from the databanks of the Office for National Statistics (UK), Eurostat (Continental Europe), the Bureau of Labour Statistics (US) and other assorted official government statistical agencies. By virtue of their status as executive agencies, government statistical bodies have a statutory right to demand companies be part of their sample.
On being approached, firms have an obligation to complete a monthly return form. These require the companies to reveal how their prices and volumes have moved from month to month. Once compiled, the data gives an invaluable insight into trading performance at the product level, albeit still in its raw form.
THE QMG PROCESS
QMG has developed software processes to quickly disseminate raw statistical information such that our model is updated as soon as all the required data-points are made available.
QMG Insight couples material, labour and service cost data with a measure designed to reflect dynamics in operational costs (reflecting overheads). It thus creates a unique unit cost indicator for each sector under investigation. Alongside the measure for the change in total unit costs, QMG Insight constructs a measure capturing the growth in unit prices. For manufacturers and distributors, this reflects a weighted basket of prices charged to domestic and overseas customers. For retailers, it represents the high street price of goods sold.
By taking the differential between growth in prices and costs, the system is able to construct a year–on–year dynamic for trading margins. The QMG Insight system also tracks revenues. Here it compares price inflation with dynamics in activity. For manufacturers and distributors, activity reflects actual production volumes. For retailers, activity represents retail sales volumes.
The system allows the measurement of business performance on a monthly basis. It thus provides an invaluable in–fill between the traditional six–monthly reporting periods in Europe, and quarterly reports in the US.
With corporate governance becoming ever stricter, access to a reliable but independent source of data will itself become all the more important – remembering of course that the data itself derives directly from companies.
To take it even further we look at how well correlated the QMG Sales and Margins are against various securities or indexes. We correlate versus equities (historical reported earnings or share price growth), ETF’s and Sector Indexes (share price growth) and also Economic Indexes (growth).
Below is a 5 step process which simplifies our the process we desribed above