price to sales ratio
KRAFT FOODS GROUP INC. $83 (Nasdaq symbol KRFT; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 588.0 million; Market cap: $48.8 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.kraftfoodsgroup.com) is merging with H.J. Heinz. The new firm— The Kraft Heinz Company— will be the 5th largest food company in the world, with annual revenue of $28 billion. Under the terms of the deal, Kraft shareholders will receive one share of the new firm for each share they currently hold. They will also receive a special dividend of $16.50 a share....
QUAKER CHEMICAL CORP. $83 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.3 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.4%; TSINetwork Rating: Average; www.quakerchem.com) began operating in 1918 and currently operates 34 plants in 21 countries. These facilities make lubricants and chemicals that keep mechanical parts from rusting. This small-cap stock is riskier than many of our other recommendations, but Quaker has a long history of increasing its earnings— and dividends. The company’s revenue rose 40.8%, from $544.1 million in 2010 to $765.9 million in 2014. That’s partly because it bought smaller firms that expanded its product lines and geographic reach....
RIOCAN REAL ESTATE INVESTMENT TRUST $28 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 315.4 million; Market cap: $8.8 billion; Price-to-sales ratio: 7.0; Dividend yield: 5.0%; TSINetwork Rating: Average; www.riocan.com) owns all or part of 292 shopping centres in Canada, including 15 under development. These holdings account for 84% of the REIT’s rental revenue. The remaining 16% comes from 48 malls in the U.S.
In the past few years, RioCan took advantage of lower property values and interest rates to expand its portfolio. As a result, its revenue jumped 39.8%, from $882 million in 2010 to $1.2 billion in 2014.
Due to gains and losses on property sales, earnings fell from $6.04 a unit (or a total of $1.5 billion) in 2010 to $3.25 (or $873 million) in 2011. Earnings rebounded to $4.57 a unit (or $1.3 billion) in 2012 but declined to $2.10 a unit (or $663 million) in 2014.
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In the past few years, RioCan took advantage of lower property values and interest rates to expand its portfolio. As a result, its revenue jumped 39.8%, from $882 million in 2010 to $1.2 billion in 2014.
Due to gains and losses on property sales, earnings fell from $6.04 a unit (or a total of $1.5 billion) in 2010 to $3.25 (or $873 million) in 2011. Earnings rebounded to $4.57 a unit (or $1.3 billion) in 2012 but declined to $2.10 a unit (or $663 million) in 2014.
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LINAMAR CORP. $75 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.1 million; Market cap: $4.9 billion; Price-to-sales ratio: 1.2; Dividend yield: 0.5%; TSINetwork Rating: Average; www.linamar.com) saw its sales rise 16.0% in 2014, to a record $4.2 billion from $3.6 billion in 2013.
Sales at its powertrain and driveline division (83% of the total) rose 14.7%, thanks to acquisitions and higher new car sales, which increased demand for Linamar’s transmissions and other auto parts. Sales at the industrial products division (17%) gained 23.3%, mainly due to strong demand for the company’s Skyjack selfpropelled, scissor-type elevating work platforms.
Earnings jumped 48.2% during the year, to a record $4.95 a share from $3.34. Linamar’s earnings could rise to $5.54 a share in 2015, and the stock trades at a moderate 13.5 times that forecast. The $0.40 dividend yields 0.5%.
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Sales at its powertrain and driveline division (83% of the total) rose 14.7%, thanks to acquisitions and higher new car sales, which increased demand for Linamar’s transmissions and other auto parts. Sales at the industrial products division (17%) gained 23.3%, mainly due to strong demand for the company’s Skyjack selfpropelled, scissor-type elevating work platforms.
Earnings jumped 48.2% during the year, to a record $4.95 a share from $3.34. Linamar’s earnings could rise to $5.54 a share in 2015, and the stock trades at a moderate 13.5 times that forecast. The $0.40 dividend yields 0.5%.
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BLACKBERRY LTD. $13 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 528.8 million; Market cap: $6.9 billion; Price-to-sales ratio: 1.8; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) plans to launch four new smartphones in 2015, including the Leap, which features a five-inch high-definition touch-screen display. The Leap features the company’s latest encryption technology, which should appeal to BlackBerry’s corporate and government clients.
The company has also extended its partnership with Samsung Electronics. Under the deal, Samsung will integrate BlackBerry’s mobile security software into its smartphones and tablets.
BlackBerry is a hold.
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The company has also extended its partnership with Samsung Electronics. Under the deal, Samsung will integrate BlackBerry’s mobile security software into its smartphones and tablets.
BlackBerry is a hold.
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BCE INC. $53 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 840.5 million; Market cap: $44.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 4.9%; TSINetwork Rating: Above Average; www.bce.ca) has signed a new deal with Sun Life Financial (Toronto symbol SLF) that will cut some of the risk in its Bell Canada employees’ pension plan.
Retired employees currently receive a monthly payment for the rest of their lives. However, many of these pensioners are living longer than expected, which is increasing BCE’s pension obligations.
Under this new deal, BCE will pay monthly premiums to Sun Life, which will then make monthly payments into the plan for the lifetime of existing pensioners.
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Retired employees currently receive a monthly payment for the rest of their lives. However, many of these pensioners are living longer than expected, which is increasing BCE’s pension obligations.
Under this new deal, BCE will pay monthly premiums to Sun Life, which will then make monthly payments into the plan for the lifetime of existing pensioners.
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PRECISION DRILLING CORP. $7.69 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.8 million; Market cap: $2.3 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.6%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) plans to spend $467.0 million on capital upgrades in 2015, down 38.1% from $754.9 million in 2014. That’s because lower oil prices have prompted producers to curtail drilling, hurting demand for new rigs.
Even with the lower capital spending, Precision expects to deliver 17 new rigs in 2015 (13 for the U.S., three for Canada and one for Kuwait), up from 15 in 2014. The company has already signed agreements with drillers to operate these rigs, which cuts the risk of these projects.
Due to the drop in oil prices and drilling activity, Precision will probably earn just $0.11 a share in 2015. The stock trades at 69.9 times that depressed estimate. However, Precision’s earnings could recover to $0.25 a share in 2016, and it trades at a more reasonable 30.8 times that forecast.
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Even with the lower capital spending, Precision expects to deliver 17 new rigs in 2015 (13 for the U.S., three for Canada and one for Kuwait), up from 15 in 2014. The company has already signed agreements with drillers to operate these rigs, which cuts the risk of these projects.
Due to the drop in oil prices and drilling activity, Precision will probably earn just $0.11 a share in 2015. The stock trades at 69.9 times that depressed estimate. However, Precision’s earnings could recover to $0.25 a share in 2016, and it trades at a more reasonable 30.8 times that forecast.
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FINNING INTERNATIONAL INC. $24 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.4 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.6; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.finning.com) is the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). It also sells heavy equipment made by other firms. Finning’s clients are mainly in the mining, forest products and construction industries.
Weaker commodity prices have hurt sales of new equipment and support services in Western Canada. In response, Finning plans to cut 500 jobs, or 9% of its Canadian workforce. The company didn’t say how much it would pay in severance and other costs or how much it expects to save.
In the three months ended December 31, 2014, Finning’s earnings per share rose 14.8%, to $0.62 from $0.54 a year earlier. Without one-time items, mainly positive changes related to new tax laws in Argentina, the company earned $0.55 a share. Overall revenue was flat at $1.8 billion.
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Weaker commodity prices have hurt sales of new equipment and support services in Western Canada. In response, Finning plans to cut 500 jobs, or 9% of its Canadian workforce. The company didn’t say how much it would pay in severance and other costs or how much it expects to save.
In the three months ended December 31, 2014, Finning’s earnings per share rose 14.8%, to $0.62 from $0.54 a year earlier. Without one-time items, mainly positive changes related to new tax laws in Argentina, the company earned $0.55 a share. Overall revenue was flat at $1.8 billion.
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LOBLAW COMPANIES LTD. $61 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 412.5 million; Market cap: $25.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.loblaw.ca) reported that its sales jumped 49.4% in the three months ended January 3, 2015, to $11.4 billion from $7.6 billion a year earlier.
The gain is mainly due to the Shoppers Drug Mart drugstore chain, which Loblaw bought in March 2014. Same-store sales rose 3.3% at Loblaw’s supermarkets and 3.8% at Shoppers.
Excluding integration costs and other unusual items, earnings jumped 146.0%, to $396 million from $161 million. Per-share profits gained 68.4%, to $0.96 from $0.57, on more shares outstanding.
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The gain is mainly due to the Shoppers Drug Mart drugstore chain, which Loblaw bought in March 2014. Same-store sales rose 3.3% at Loblaw’s supermarkets and 3.8% at Shoppers.
Excluding integration costs and other unusual items, earnings jumped 146.0%, to $396 million from $161 million. Per-share profits gained 68.4%, to $0.96 from $0.57, on more shares outstanding.
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SNC-LAVALIN GROUP INC. $38 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.5 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.6%; TSINetwork Rating: Average; www.snclavalin.com) earned $106.7 million in the fourth quarter of 2014, up 0.6% from $106.1 million a year earlier. Earnings per share were unchanged at $0.70. These figures exclude a gain on the sale of AltaLink, which operates power lines in Alberta.
Revenue jumped 32.7%, to $2.8 billion from $2.1 billion, due to the recent acquisition of U.K.-based Kentz, which provides engineering and construction services to the oil and gas industry.
The stock has suffered lately, mainly due to formal charges against the company for using bribes to win construction contracts in Libya between 2001 and 2011. These are the same allegations that prompted SNC to replace its senior executives in 2012 and bring in a new program to enforce ethical practices.
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Revenue jumped 32.7%, to $2.8 billion from $2.1 billion, due to the recent acquisition of U.K.-based Kentz, which provides engineering and construction services to the oil and gas industry.
The stock has suffered lately, mainly due to formal charges against the company for using bribes to win construction contracts in Libya between 2001 and 2011. These are the same allegations that prompted SNC to replace its senior executives in 2012 and bring in a new program to enforce ethical practices.
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