price to sales ratio
ANDREW PELLER LTD. $14 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 11.3 million; Market cap: $158.2 million; Price-to-sales ratio: 0.7; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.andrewpeller.com) is Canada’s second-largest producer of wines, after Vincor International. The company has wineries in Nova Scotia, Ontario and British Columbia.
In its 2014 fiscal year, which ended March 31, 2014, Peller’s sales rose 3.0%, to $297.8 million from $289.1 million in fiscal 2013. That’s mainly because it launched several successful products. Demand for its premium wines also remains strong.
However, strong competition in Western Canada and the Maritimes, as well as higher costs for wine and juice from overseas suppliers, cut Peller’s earnings by 3.4%, to $14.0 million from $14.5 million. Per-share earnings fell 2.9%, to $1.01 from $1.04. Without unusual items, such as losses on hedging contracts, earnings would have risen 4.5%.
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In its 2014 fiscal year, which ended March 31, 2014, Peller’s sales rose 3.0%, to $297.8 million from $289.1 million in fiscal 2013. That’s mainly because it launched several successful products. Demand for its premium wines also remains strong.
However, strong competition in Western Canada and the Maritimes, as well as higher costs for wine and juice from overseas suppliers, cut Peller’s earnings by 3.4%, to $14.0 million from $14.5 million. Per-share earnings fell 2.9%, to $1.01 from $1.04. Without unusual items, such as losses on hedging contracts, earnings would have risen 4.5%.
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MOLSON COORS CANADA INC. (Toronto symbols TPX.A $78 and TPX.B $78; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 184.8 million; Market cap: $14.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.1%; TSINetwork Rating: Average; www.molsoncoors.com) is the world’s fifth-largest brewer.
In June 2012, Molson Coors paid $3.5 billion for StarBev, which owns nine breweries in central and eastern Europe (all amounts except share prices and market cap in U.S. dollars). The purchase has helped offset slower North American beer sales.
The company is also doing a good job of cutting StarBev’s costs and making it more efficient. In the three months ended March 31, 2014, Molson Coors’ earnings before one-time items jumped 115.2%, to $102.2 million from $47.5 million a year earlier. Per-share earnings rose 111.5%, to $0.55 from $0.26, on more shares outstanding.
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In June 2012, Molson Coors paid $3.5 billion for StarBev, which owns nine breweries in central and eastern Europe (all amounts except share prices and market cap in U.S. dollars). The purchase has helped offset slower North American beer sales.
The company is also doing a good job of cutting StarBev’s costs and making it more efficient. In the three months ended March 31, 2014, Molson Coors’ earnings before one-time items jumped 115.2%, to $102.2 million from $47.5 million a year earlier. Per-share earnings rose 111.5%, to $0.55 from $0.26, on more shares outstanding.
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CANADIAN IMPERIAL BANK OF COMMERCE $97 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 397.4 million; Market cap: $38.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.cibc.com) took control of FirstCaribbean, which offers banking services in 17 Caribbean countries, in December 2006. CIBC now holds a 91.7% stake. The region’s slow growth and high unemployment have prompted CIBC to write down the value of this investment by $420 million.
Due to this charge, as well as costs to launch a new loyalty plan for travellers after it lost the Aeroplan contract, CIBC’s earnings in the quarter ended April 30, 2014 fell 64.5%, to $306 million, or $0.73 a share. If you exclude all unusual items, the bank earned $887 million, or $2.17 a share. A year earlier, CIBC earned $862 million, or $2.09 a share.
Revenue rose just 1.4%, to $3.17 billion from $3.12 billion, mainly due to the loss of the Aeroplan deal.
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Due to this charge, as well as costs to launch a new loyalty plan for travellers after it lost the Aeroplan contract, CIBC’s earnings in the quarter ended April 30, 2014 fell 64.5%, to $306 million, or $0.73 a share. If you exclude all unusual items, the bank earned $887 million, or $2.17 a share. A year earlier, CIBC earned $862 million, or $2.09 a share.
Revenue rose just 1.4%, to $3.17 billion from $3.12 billion, mainly due to the loss of the Aeroplan deal.
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TRANSCANADA CORP. $50 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.4 million; Market cap: $35.4 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) operates a 68,500-kilometre pipeline network that pumps natural gas from Alberta to Eastern Canada and the U.S. The company’s pipelines supply 20% of North America’s natural gas. In 2013, they provided 51% of TransCanada’s revenue and 53% of its earnings.
The company also owns or invests in power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 11,800 megawatts of generating capacity. TransCanada’s electricity operations now supply 36% of its revenue and 30% of its earnings.
In 2011, the company started up its oil pipeline division. This business mainly consists of the Keystone pipeline, which pumps oil from Alberta to refineries in Illinois, and a distribution hub in Cushing, Oklahoma. Oil pipelines supply the remaining 13% of TransCanada’s revenue and 17% of its earnings.
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The company also owns or invests in power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 11,800 megawatts of generating capacity. TransCanada’s electricity operations now supply 36% of its revenue and 30% of its earnings.
In 2011, the company started up its oil pipeline division. This business mainly consists of the Keystone pipeline, which pumps oil from Alberta to refineries in Illinois, and a distribution hub in Cushing, Oklahoma. Oil pipelines supply the remaining 13% of TransCanada’s revenue and 17% of its earnings.
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ENBRIDGE INC. $51 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 834.8 million; Market cap: $42.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.enbridge.com) operates pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The company’s pipelines also handle 53% of Canada’s crude oil exports to the U.S.
Pipelines supply 90% of Enbridge’s revenue. The remaining 10% comes from distributing gas to two million consumers in Ontario, Quebec, New Brunswick and New York State.
In the quarter ended March 31, 2014, Enbridge’s revenue jumped 33.2%, to $10.5 billion from $7.9 billion a year earlier, mainly because the company is pumping more crude from the Alberta oil sands.
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Pipelines supply 90% of Enbridge’s revenue. The remaining 10% comes from distributing gas to two million consumers in Ontario, Quebec, New Brunswick and New York State.
In the quarter ended March 31, 2014, Enbridge’s revenue jumped 33.2%, to $10.5 billion from $7.9 billion a year earlier, mainly because the company is pumping more crude from the Alberta oil sands.
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METRO INC. $67 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 87.0 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Average; www.metro.ca) is Canada’s third-largest supermarket operator, after Loblaw (also in this issue) and Sobeys. It now has 600 supermarkets and 250 drugstores.
To cut its reliance on Quebec, which accounted for nearly all of its revenue, Metro bought A&P Canada for $1.7 billion in 2005. The chain consisted of 240 food stores in Ontario, mostly under the A&P and Dominion names.
Since then, Metro has mainly focused on improving the profitability of its stores. Lower costs will give the company more flexibility to adjust its prices, and cope with the recent 7.3% increase in Ontario’s minimum wage.
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To cut its reliance on Quebec, which accounted for nearly all of its revenue, Metro bought A&P Canada for $1.7 billion in 2005. The chain consisted of 240 food stores in Ontario, mostly under the A&P and Dominion names.
Since then, Metro has mainly focused on improving the profitability of its stores. Lower costs will give the company more flexibility to adjust its prices, and cope with the recent 7.3% increase in Ontario’s minimum wage.
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YUM! BRANDS INC. $82 (New York symbol YUM; Aggressive Growth Portfolio; Consumer sector; Shares outstanding: 411.4 million; Market cap: $33.7 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.yum.com) has 40,324 fast-food restaurants in over 110 countries. Its main banners include KFC (fried chicken), Pizza Hut and Taco Bell (Mexican food). Franchisees operate 80% of these outlets.
The company was the first fast-food chain to enter China, in 1987, and is now a leader in that country. Its 6,332 Chinese outlets now supply 53% of its sales and 35% of its earnings. Other markets include the U.S. (23% of sales, 31% of earnings), and other countries (24%, 34%).
The company was the first fast-food chain to enter China, in 1987, and is now a leader in that country. Its 6,332 Chinese outlets now supply 53% of its sales and 35% of its earnings. Other markets include the U.S. (23% of sales, 31% of earnings), and other countries (24%, 34%).
Food safety fears hurt results
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UNITED TECHNOLOGIES CORP. $116 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 916.7 million; Market cap: $106.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.utc.com) has amended its deal to build 28 Sikorsky Cyclone helicopters for the Canadian government. The company had planned to deliver these helicopters in 2012, but disputes over prices and support prompted it to suspend the program. It now plans to begin deliveries in 2015.
The original contract was worth $4.6 billion. But due to the delays in starting up production, United Technologies will record a one-time charge of $440 million in the second quarter of 2014. However, it feels other unusual gains will offset this charge.
As a result, the company still expects to earn $6.65 to $6.85 a share for all of 2014. The stock trades at 17.2 times the midpoint of that range. That’s a reasonable p/e ratio in light of its leading market share in its various niche industries (jet engines, elevators and heating and air conditioning equipment) and wide global reach (overseas markets account for 60% of its revenue).
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The original contract was worth $4.6 billion. But due to the delays in starting up production, United Technologies will record a one-time charge of $440 million in the second quarter of 2014. However, it feels other unusual gains will offset this charge.
As a result, the company still expects to earn $6.65 to $6.85 a share for all of 2014. The stock trades at 17.2 times the midpoint of that range. That’s a reasonable p/e ratio in light of its leading market share in its various niche industries (jet engines, elevators and heating and air conditioning equipment) and wide global reach (overseas markets account for 60% of its revenue).
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GENUINE PARTS CO. $87 (New York symbol GPC; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 153.6 million; Marketcap: $13.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.6%; TSINetwork Rating: Average; www.genpt.com) has agreed to pay an undisclosed sum for Toledo, Ohio-based Impact Products. This privately held firm sells janitorial equipment, such as mops, pails, safety glasses and first aid kits, to businesses.
Expanding by acquisition adds risk, but the purchase looks like a good fit with Genuine’s office supplies and furniture business. The new operations will also add $85 million to Genuine’s $14.1 billion of annual sales. Moreover, small purchases like this tend to be easier to integrate.
The stock now trades at 19.0 times the company’s projected 2014 earnings of $4.58 a share. That’s a high p/e for a firm that supplies clients in cyclical industries like auto parts and manufacturing.
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Expanding by acquisition adds risk, but the purchase looks like a good fit with Genuine’s office supplies and furniture business. The new operations will also add $85 million to Genuine’s $14.1 billion of annual sales. Moreover, small purchases like this tend to be easier to integrate.
The stock now trades at 19.0 times the company’s projected 2014 earnings of $4.58 a share. That’s a high p/e for a firm that supplies clients in cyclical industries like auto parts and manufacturing.
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GANNETT CO., INC. $31 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 226.8 million; Market cap: $7.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.6%; TSINetwork Rating: Average; www.gannett.com) has completed the sale of two TV stations in Phoenix and one in St. Louis for a total of $407.5 million.
The cash will help Gannett pay for its recent deal to buy six Texas TV stations from London Broadcasting Co. The company will pay $215 million when the deal closes in the next few months. To put these figures in context, Gannett earned $108.4 million, or $0.47 a share, in the first quarter of 2014.
Gannett is a buy.
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The cash will help Gannett pay for its recent deal to buy six Texas TV stations from London Broadcasting Co. The company will pay $215 million when the deal closes in the next few months. To put these figures in context, Gannett earned $108.4 million, or $0.47 a share, in the first quarter of 2014.
Gannett is a buy.
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