I've been quiet on the blog for a few months now, life has been busy and challenging, and I've been trading in the markets ahead of the presidential elections. I won't get into FI and sentiment, trying to keep this one positive and focusing on players! I've also broken my hand a few months ago after a bike accident so I'm going to keep this brief.
I've also been working on a new valuation figure for Football Index players, called PEGY (Price Earnings Growth Yield). You can read all about it here. It's basically a measure of how much the market is willing to pay for earnings growth and dividends yield. By incorporating dividend yield, the PEGY ratio accounts for a players ability, or not, to pay out dividends.
The problem with a lot of analysis on FI, even some of the best ones, is that it's historical and looks at previous seasons. Unfortunately, past performance is no guarantee of future returns and the further back you look, the less useful the stats become. Just saying “Yields are so much better with the current Dividends” really doesn't help with regards to recognising a change in trend and who to actually buy, or sell!
The way I have worked out PEGY, is to break times into 4 different time phases, and recording P/E, Earnings Growth, Divs and Yields for each. The time phases I decided on, are as follows -:
Phase 1 – 9/8/2019 – 25/11/2019 (108 days)
Phase 2 – 26/11/2019 – 13/3/2020 (108 days) (Covid)
Phase 3 – 16/5/2020 – 23/08/2020 (99 days) (Post Covid – End of Season)
Phase 4 – 24/8/2020 – Current (64 Days, will reach 99 days on 1/12/2020)
The reason I've done this, is that it enables you to see how progressively better value a player is becoming, based on new and up to date information. Now, a big problem with this, in the current climate, is that quite a few players have not got positive earnings growth rate, due to quite substantial drops in cap app, or no earned Divs during one of these periods. There is also a problem in that we only have 64 days in the current phase, so some players will not yet have reached their previous Div return potential for an accurate measurement. There are also other anomolies like Champions League football falling in some phases and not in others, but for me, this is about the best way for me to track the ongoing and improving value on players.
PEGY is not really enough, what I have done is look at the Top-10 players by Top-3 Highest PB Figures from last season. Let's take a look at last season first of all, and those with decent, low PEGY figures from that filtered list, remember that anything less than 1.00 is considered value.
KYLIAN MBAPPE – During Phase 1 he produced 0p in Divs, during Phase 2 he produced 8p in Divs, during Phase 3 he produced 0p in Divs and in Phase 4, currently 4p in Divs. The problem is that he only has one period where we can calculate earnings growth rate, between Phase 2 and Phase 4 and unfortunately that as a negative EGR% of -29.29%. So we can't actually calculate any positive earnings growth rate for Mbappe, so he has no PEGY. It's one reason why I'm not a holder, despite recognising his obvious immense talent as a footballer, he really needs to do something a bit special, in FI terms, on a regular basis, for me to be interested.
NEYMAR – During Phase 1 he produced 7p in Divs, during Phase 2 he produced 56p in Divs, during Phase 3 he produced 28p in Divs and currently in Phase 4 he has 22p in Divs. So between Phase 1 and Phase 4, his EGR% is 46.48%, and he gets a PB PEGY of 0.15, which is excellent, as if you needed me to tell you that. If we look at perhaps a fuller picture of between a full Phase 3 and Phase 1, he has 100% EGR% which gives him a PEGY of 0.10 – which is also excellent. Ultimately, a rock solid buy IMO and value on PB.
JADON SANCHO – During Phase 1 he produced 3p in PB Divs, Phase 2 was 8p in Divs, Phase 3 he managed 4p in Divs and so far in Phase 4, he has 0p in PB Divs. So, really we can only look at him having an EGR% of 15% between Phase 1 and Phase 3 and at his current price, that only gives him a PEGY of 3.71, so not considered currently good value for PB. I noticed this early on during Phase 3 when he was failing to return PB Divs and took some profits, and it's clear he needs to perform better as a lot of his price was attached to a Man United move that didn't materialise. Now, of course PB is just one piece of the puzzle, MB has to be considered, but it's rarely enough on it's own when football is being played and it can be fleeting. Here is an update to this on 29th October, making Sancho a value buy now he has earned Divs
JOSHUA KIMMICH – During Phase 1 he earned 8p in Divs, during Phase 2 he has 20p in Divs, during Phase 3 he has 48p in Divs and currently in Phase 4 he has 18p in Divs. So between Phase 1 and the current, shortened Phase 4, he has an EGR of 31% and a 0.17 PEGY, not far of Neymar tbh. However, if we look at his improvement between Phase 1 and Phase 3, he actually has 145% EGR, giving him a PEGY of 0.06 and that is the exact same PEGY he has with a 140% EGR between Phase 2 and Phase 3, which is an excellent example of his consistency. Of all the top-players, he looks rock solid hitting his peak age.
KEVIN DE BRUYNE – During Phase 1 he earned 19p in Divs, just 6p in Divs during Phase 2, 59p in Divs during Phase 3 and currently just 8p in Divs during Phase 4. His Phase 2 > Phase4, still gives him a decent EGR of 15% with a PEGY of 0.22, his Phase 1 to Phase 3 sees him with 76% EGR and PEGY of 0.08, but if we look at his Phase 2 > Phase 3, he has an amazing 883% EGR with a PEGY of 0.01. Now, it will be key if he can maintain his Div rate between now and the start of December, a few injury concerns have surfaced but there is no arguing with his consistency, or his value across different phases, so also looks rock-solid, barring injury, which also has to be taken into account regarding his age.
TRENT ALEXANDER ARNOLD – Phase 1 he produced 23p, Phase 2 he produced 24p, Phase 3 he produced 0p in Divs (where the clues were there) and Phase 4 he also has 0p in Divs. So, basically, it looks like his star is on the wane, at least during these phases. Time will tell, but he has no PEGY to speak of currently. Now, that may change, there have been numerous good posts on Twitter about why this may have happened recently. One key thing is that these clues could have been found by 23rd August, when he was still priced around £10.10 – so this shows the benefit of looking at phases of time, rather than a whole season's stats, the earlier we can spot regression or progression, the better. That's not to say that will stay the same, players of that class at a young age, cannot be written off, but for me it was a key reason why I stated a few months ago, to much derision, that Kimmich would win more TOTM Divs than Trent. We shall see on that.
SERGE GNABRY – is consistent, if unremarkable in his PB Div returns but he has 5p Div in Phase 1, 4p Divs in Phase 2 and has improved to 10p in Phase 3 and currently 8p in Phase 4, so he is on-track for further earnings growth to Phase 4. So, betwen Phase 1 and Phase 3 he has an EGR of 150% and a PEGY of 0.14 so looks excellent value.
ROBERT LEWANDOWSKI – Phase 1 he has 5p in Divs, Phase 2 he has 22p in Divs, Phase 3 he has 40p in Divs and so far in Phase 4 he has 28p in Divs. So he has a decent 77% EGR between Phase 1 and Phase 4 for a PEGY of 0.04, incredible value. From Phase 2 to Phase 4 he has a EGR of 13% and PEGY of 0.10. Between Phase 1 and Phase 3 he has 182% EGR with a PEGY of 0.03 and between Phase 2 and Phase 3 he has 82% EGR with a PEGY of 0.05. So, overall he also looks excellent value.
So, that's just a few names. There are others who need to show improvement but have looked value before this phase. Marcus Rashford is slightly more consistent, and value, than Raheem Sterling, but both have yet to find their PB feet this season. Here is an update on Marcus Rashford from 29th October.
There are guys that are great value still, based on last years PB figures filtering remember, there are a few others that are on the cusp of producing good figures, and already scoring well, notably SERGIO RAMOS and ALEJANDRO GOMEZ
NO TIME LIKE THE PRESENT
So, the above are players that were doing well, or not, based on last season's PB figures. But, the real strength of this comes from looking at this seasons Top-10 players on Top-3 highest PB figures that are value.
Neymar, Kimmich, De Bruyne, Gnabry, Lewandowski, Ramos and Gomez are names from above, that are producing the goods this season, are value, and they all look fairly rock-solid.
MO SALAH – 3p in Divs during Phase 1, 12p in Phase 2, 8p in phase3 and so far, 16p in Phase 4 – he has PEGS ranging between 0.08 to 0.34 across 4 different phases, depending on where you look, so he looks like he is bang on form, after a relatively slow year last year in terms of PB and value for PB Divs.
SON HEUNG-MIN – A new name on the list and a player who I really, really like and impresses me both with his skill, finishing and work-rate. He has 0p in Divs in Phase 1 and Phase 2 but he has 2p in Divs in Phase 3 and 44p in Divs in Phase 4 thanks to two Star player wins on a Silver and Gold Day. This gives him an incredible EGR of 2100% and a PEGY of 0.00, so you can't get much better value than that! He looks seriously good value right now, even if that EGR will likely dip between now and the end of December.
Angel Di Maria, Daniel Parejo and Jesus Navas are 3 guys looking good so far, even if a little long in the tooth, but great value, nonetheless.
Grealish, Richarlison, Marquinhos and Verrati are 4 other names worth noting.
Teji Savanier and Gianluigi Donnarumma are another couple of names.
Andrew Robertson, Andrej Kramaric, Jonathan Bamba, Michael Keane and Aaron Cresswell are 5 others catching the eye.
Messi and Canales are two names yet to win Divs that have done well n the past and would be of interest if they can show something between now and December 1st.
This is a bit of a work in progress, but it can flag players on the improve, like Son, and those perhaps needing to do a bit better.
I'm going to see if I can make this data available on an ongoing basis on the site somewhere, if there is interest.
Next post will be focusing on PEGY figures for IPD's.
Who do you like from this list and is there a player you would like to know more about – please comment below and thanks for reading.