price to sales ratio
NVIDIA CORP. $21 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 543.5 million; Market cap: $11.4 billion; Price-to- sales ratio: 2.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.nvidia.com) is a leading designer of 3D-capable video chips, which make video games run more smoothly and appear more lifelike. The company outsources most of its production to Asian chipmakers.
In its fiscal 2015 third quarter, which ended October 26, 2014, Nvidia’s revenue rose 16.3%, to a record $1.2 billion from $1.1 billion a year earlier. Earnings jumped 43.3%, to $220.4 million from $153.8 million. The company spent $810.0 million on share buybacks in the past nine months. As a result, its earnings per share rose 50.0%, to $0.39 from $0.26.
Nvidia spends around 30% of its revenue on research, which is helping it expand into new areas, particularly chips for mobile devices. Its new Tegra chips now power Google’s new Nexus 9 tablet and Chromebook laptop computer. The company also recently launched its own tablet, called Shield, specifically for video game enthusiasts.
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In its fiscal 2015 third quarter, which ended October 26, 2014, Nvidia’s revenue rose 16.3%, to a record $1.2 billion from $1.1 billion a year earlier. Earnings jumped 43.3%, to $220.4 million from $153.8 million. The company spent $810.0 million on share buybacks in the past nine months. As a result, its earnings per share rose 50.0%, to $0.39 from $0.26.
Nvidia spends around 30% of its revenue on research, which is helping it expand into new areas, particularly chips for mobile devices. Its new Tegra chips now power Google’s new Nexus 9 tablet and Chromebook laptop computer. The company also recently launched its own tablet, called Shield, specifically for video game enthusiasts.
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UNITED TECHNOLOGIES CORP. $97 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 887.0 million; Market cap: $86.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.utc.com) has four main businesses: Climate, Controls & Security (30% of revenue, 32% of earnings) makes heating and air conditioning equipment under the Carrier brand, as well as burglar alarms and fire-safety products; Aerospace Systems (25%, 24%) makes enginecontrol systems and other parts for aircraft; Pratt & Whitney (23%, 17%) manufactures aircraft engines; and Otis (22%, 27%) makes elevators.
Major takeover paid off
The company’s revenue rose 7.1%, from $54.3 billion in 2010 to $58.2 billion in 2011. In 2012, it paid $18.3 billion for North Carolina-based Goodrich Corp., which makes aircraft parts (such as landing gear, wheels and brakes) and maintains and fixes planes. However, it also sold smaller businesses, so its revenue fell 0.8%, to $57.7 billion, in 2012.
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Major takeover paid off
The company’s revenue rose 7.1%, from $54.3 billion in 2010 to $58.2 billion in 2011. In 2012, it paid $18.3 billion for North Carolina-based Goodrich Corp., which makes aircraft parts (such as landing gear, wheels and brakes) and maintains and fixes planes. However, it also sold smaller businesses, so its revenue fell 0.8%, to $57.7 billion, in 2012.
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DIEBOLD INC. $34 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.0 million; Market cap: $2.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.4%; TSINetwork Rating: Average; www.diebold.com) is buying German ATM maker Wincor Nixdorf AG for $1.8 billion (80% in cash and 20% in stock).
The combined firm will be the world’s largest maker of ATMs, with 35% of the market and $5.2 billion in annual revenue. Diebold aims to close the deal in mid-2016.
The company plans to borrow $2.8 billion to pay for Wincor, which will increase its total debt to around $3.5 billion. However, it should save $160 million a year by eliminating overlapping operations, which will help it pay down this debt. It will also cut its dividend rate by 67%, from $1.15 to $0.38, which would yield 1.1%.
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The combined firm will be the world’s largest maker of ATMs, with 35% of the market and $5.2 billion in annual revenue. Diebold aims to close the deal in mid-2016.
The company plans to borrow $2.8 billion to pay for Wincor, which will increase its total debt to around $3.5 billion. However, it should save $160 million a year by eliminating overlapping operations, which will help it pay down this debt. It will also cut its dividend rate by 67%, from $1.15 to $0.38, which would yield 1.1%.
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SHERWIN-WILLIAMS CO. $276 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 93.1 million; Market cap: $25.7 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.0%; TSINetwork Rating: Above Average; www.sherwin-williams.com) reported $3.15 billion of sales in the three months ended September 30, 2015, unchanged from a year earlier. Consumers bought more paint, offsetting lower sales to industrial clients and weakness in Latin America. Excluding exchange rates, sales gained 3.7%.
Earnings rose 14.8%, to $374.5 million from $326.2 million. Per-share profits gained 18.5%, to $3.97 from $3.35, on fewer shares outstanding. For all of 2015, the company expects to earn $10.75 to $11.00 a share. However, the stock is expensive at 25.4 times the midpoint of that range.
Sherwin-Williams is a hold.
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Earnings rose 14.8%, to $374.5 million from $326.2 million. Per-share profits gained 18.5%, to $3.97 from $3.35, on fewer shares outstanding. For all of 2015, the company expects to earn $10.75 to $11.00 a share. However, the stock is expensive at 25.4 times the midpoint of that range.
Sherwin-Williams is a hold.
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MONSANTO CO. $96 (New York symbol MON, Aggressive Growth Portfolio; Manufacturing & Industry sector; Shares outstanding: 439.8 million; Market cap: $42.2 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.monsanto.com) plans to cut 12% of its workforce over the next two years. That’s because low prices for corn, soybeans and wheat are prompting farmers to buy fewer of its genetically modified seeds and other agricultural products.
The company now expects the cuts to save it $500 million annually by fiscal 2018 (fiscal years end August 31), up from its earlier target of $300 million. Monsanto earned $2.8 billion, or $5.73 a share, in fiscal 2015.
Monsanto is still a buy.
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The company now expects the cuts to save it $500 million annually by fiscal 2018 (fiscal years end August 31), up from its earlier target of $300 million. Monsanto earned $2.8 billion, or $5.73 a share, in fiscal 2015.
Monsanto is still a buy.
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KEYSIGHT TECHNOLOGIES INC. $31 (New York symbol KEYS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.0 million; Market cap: $5.3 billion; Price-to-sales ratio: 1.8; No dividends paid; TSINetwork Rating: Average; www.keysight.com) reported a 2.6% revenue decline in its 2015 fiscal year, which ended October 31, 2015, to $2.86 billion from $2.93 billion in 2014. Excluding exchange rates, revenue rose 1%.
Before unusual items, earnings fell 15.0%, to $432 million from $508 million. Due to more shares outstanding, per-share earnings fell 17.1%, to $2.52 from $3.04. That’s partly because Keysight raised its research spending by 7.2%, to $387 million (or 13.6% of revenue) from $361 million (or 12.3%).
The company aims to shift away from manufacturing testing equipment for electronic devices to more profitable businesses like software and services. However, its short-term outlook is weak, which is why the stock trades at just 12.0 times the $2.59 a share Keysight will probably earn in fiscal 2016.
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Before unusual items, earnings fell 15.0%, to $432 million from $508 million. Due to more shares outstanding, per-share earnings fell 17.1%, to $2.52 from $3.04. That’s partly because Keysight raised its research spending by 7.2%, to $387 million (or 13.6% of revenue) from $361 million (or 12.3%).
The company aims to shift away from manufacturing testing equipment for electronic devices to more profitable businesses like software and services. However, its short-term outlook is weak, which is why the stock trades at just 12.0 times the $2.59 a share Keysight will probably earn in fiscal 2016.
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SNAP-ON INC. $171 (New York symbol SNA; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 58.1 million; Market cap: $9.9 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.4%; TSINetwork Rating: Average; www.snapon.com) makes tools for auto mechanics and sells them through a fleet of franchised vans that visit garages. It also makes specialized tools for industrial customers.
Snap-On continues to expand beyond the U.S., which supplies 65% of its revenue. In August 2015, it paid $13.1 million for Ecotechnic, an Italian maker of equipment for maintaining vehicle air conditioning systems. The purchase should add roughly $13 million to Snap-On’s annual revenue.
The company is also seeing strong demand for its tools and other products. In the three months ended October 3, 2015, its revenue gained 1.9%, to $821.5 million from $806.3 million a year earlier. Excluding exchange rates and acquisitions, sales gained 7.3%. Earnings per share rose 12.5%, to $1.98 from $1.76.
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Snap-On continues to expand beyond the U.S., which supplies 65% of its revenue. In August 2015, it paid $13.1 million for Ecotechnic, an Italian maker of equipment for maintaining vehicle air conditioning systems. The purchase should add roughly $13 million to Snap-On’s annual revenue.
The company is also seeing strong demand for its tools and other products. In the three months ended October 3, 2015, its revenue gained 1.9%, to $821.5 million from $806.3 million a year earlier. Excluding exchange rates and acquisitions, sales gained 7.3%. Earnings per share rose 12.5%, to $1.98 from $1.76.
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GENUINE PARTS CO. $91 (New York symbol GPC; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 150.8 million; Market cap: $13.7 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.7%; TSINetwork Rating: Average; www.genpt.com) gets about half of its sales and earnings by selling replacement auto parts. The company operates 1,100 outlets under the NAPA banner, and its distribution business serves 4,900 independent stores in North America, Australia and New Zealand.
Genuine also distributes industrial parts, office products and electrical equipment. It gets 80% of its revenue from the U.S.
The company recently agreed to buy Covs Parts, an auto-parts distributor in Western Australia.
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Genuine also distributes industrial parts, office products and electrical equipment. It gets 80% of its revenue from the U.S.
The company recently agreed to buy Covs Parts, an auto-parts distributor in Western Australia.
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ARCHER DANIELS MIDLAND CO. $36 (New York symbol ADM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 596.7 million; Market cap: $21.5 billion; Price-to-sales ratio: 0.3; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.adm.com) processes corn, wheat, soybeans, canola, flax seed, peanuts and other crops into a variety of food ingredients, such as flour, oils and sweeteners. It’s also the largest maker of ethanol from corn in the U.S.
In the three months ended September 30, 2015, Archer’s earnings fell 66.3%, to $252 million from $747 million a year earlier. It spent $1.8 billion on share buybacks in the first nine months of 2015, so per-share profits declined 64.0%, to $0.41 from $1.14, on fewer shares outstanding.
Without unusual items, mainly gains on asset sales, earnings per share fell 30.2%, to $0.60 from $0.86. Revenue declined 8.6%, to $16.6 billion from $18.1 billion. International markets supply half of the company’s revenue, so the high U.S. dollar hurts the contribution from its overseas operations. Record crop harvests have also depressed prices and profits at its grain-trading business.
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In the three months ended September 30, 2015, Archer’s earnings fell 66.3%, to $252 million from $747 million a year earlier. It spent $1.8 billion on share buybacks in the first nine months of 2015, so per-share profits declined 64.0%, to $0.41 from $1.14, on fewer shares outstanding.
Without unusual items, mainly gains on asset sales, earnings per share fell 30.2%, to $0.60 from $0.86. Revenue declined 8.6%, to $16.6 billion from $18.1 billion. International markets supply half of the company’s revenue, so the high U.S. dollar hurts the contribution from its overseas operations. Record crop harvests have also depressed prices and profits at its grain-trading business.
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NORDSTROM INC. $58 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 185.4 million; Market cap: $10.8 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.6%; TSINetwork Rating: Average; www.nordstrom.com) is down 30% from its peak of $83 in March 2015. The company is seeing slowing sales, and it’s investing in new websites and stores in Canada. That’s squeezing its profit margins.
In its fiscal 2016 third quarter, which ended October 31, 2015, sales rose 6.5%, to $3.2 billion from $3.0 billion a year earlier. Same-store sales rose 0.9%, well below the consensus forecast of a 3.6% gain. Earnings fell 21.9%, to $0.57 a share from $0.73.
Nordstrom now expects same-store sales growth of 2.5% to 3.0% for all of fiscal 2016, down from its earlier forecast of 3.5% to 4.5%. It also cut its full-year earnings outlook to $3.35 a share from $3.75. The stock trades at 17.3 times the new estimate. That’s a reasonable multiple, as the company’s margins should improve once its new investments begin contributing to its profits.
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In its fiscal 2016 third quarter, which ended October 31, 2015, sales rose 6.5%, to $3.2 billion from $3.0 billion a year earlier. Same-store sales rose 0.9%, well below the consensus forecast of a 3.6% gain. Earnings fell 21.9%, to $0.57 a share from $0.73.
Nordstrom now expects same-store sales growth of 2.5% to 3.0% for all of fiscal 2016, down from its earlier forecast of 3.5% to 4.5%. It also cut its full-year earnings outlook to $3.35 a share from $3.75. The stock trades at 17.3 times the new estimate. That’s a reasonable multiple, as the company’s margins should improve once its new investments begin contributing to its profits.
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