price to sales ratio
STATE STREET CORP. $71 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 439.0 million; Market cap: $31.2 billion; Price-to-sales ratio: 3.3; Dividend yield: 1.5%; TSINetwork Rating: Extra Risk; www. statestreet.com) sells accounting and administrative services to large institutional investors, such as mutual funds and pension plans.
The company’s fee income rises and falls with the value of the mutual funds and other securities it manages. Thanks to improving stock markets and new contracts, State Street’s earnings rose 13.5% in the three months ended September 30, 2013, to $537 million from $473 million a year earlier.
The company spent $560 million buying back its shares in the quarter. As a result, earnings per share gained 20.2%, to $1.19 from $0.99. Revenue increased 3.4%, to $2.5 billion from $2.4 billion.
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The company’s fee income rises and falls with the value of the mutual funds and other securities it manages. Thanks to improving stock markets and new contracts, State Street’s earnings rose 13.5% in the three months ended September 30, 2013, to $537 million from $473 million a year earlier.
The company spent $560 million buying back its shares in the quarter. As a result, earnings per share gained 20.2%, to $1.19 from $0.99. Revenue increased 3.4%, to $2.5 billion from $2.4 billion.
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PEPSICO INC. $81 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $121.5 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.pepsico.com) has won a contract to supply soft drinks to 975 Buffalo Wild Wings restaurants in the U.S. and Canada.
The two companies will also take advantage of PepsiCo’s alliances with the National Football League and Major League Baseball to develop sports-related marketing campaigns.
In addition, Buffalo Wild Wings will develop new menu items that use PepsiCo’s snack foods, including Frito-Lay and Doritos chips. PepsiCo didn’t say how much the deal is worth or how long it will last.
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The two companies will also take advantage of PepsiCo’s alliances with the National Football League and Major League Baseball to develop sports-related marketing campaigns.
In addition, Buffalo Wild Wings will develop new menu items that use PepsiCo’s snack foods, including Frito-Lay and Doritos chips. PepsiCo didn’t say how much the deal is worth or how long it will last.
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GANNETT CO. INC. $27 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 227.9 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.0%; TSINetwork Rating: Average; www.gannett.com) plans to include USAToday, its flagship newspaper, in 35 of its local daily papers’ print and electronic editions. This is a low-cost way to expose more readers to USAToday- and attract more advertisers.
As well, the company expects its TV stations’ advertising revenue to fall 20% in the fourth quarter of 2013, as the year-earlier quarter benefited from heavy political advertising ahead of the presidential election. However, if you disregard political ads, Gannett’s broadcast revenue should rise 17%.
Gannett is a buy.
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As well, the company expects its TV stations’ advertising revenue to fall 20% in the fourth quarter of 2013, as the year-earlier quarter benefited from heavy political advertising ahead of the presidential election. However, if you disregard political ads, Gannett’s broadcast revenue should rise 17%.
Gannett is a buy.
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WINDSTREAM HOLDINGS INC. $8.19 (Nasdaq symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 596.1 million; Market cap: $4.9 billion; Price-to-sales ratio: 0.8; Dividend yield: 12.2%; TSINetwork Rating: Average; www.windstream.com) gets 70% of its revenue from two fast-growing fields: high-speed Internet and business telecommunications.
The company also has 3.3 million regular phone users, mainly in rural parts of the U.S., and demand for this service is falling. In the three months ended September 30, 2013, Windstream’s revenue declined 2.7%, to $1.50 billion from $1.55 billion a year earlier. Earnings per share fell 37.5%, to $0.05 from $0.08. If you exclude costs to integrate an acquisition and a loss on the early retirement of debt, earnings were flat.
Windstream is a hold....
The company also has 3.3 million regular phone users, mainly in rural parts of the U.S., and demand for this service is falling. In the three months ended September 30, 2013, Windstream’s revenue declined 2.7%, to $1.50 billion from $1.55 billion a year earlier. Earnings per share fell 37.5%, to $0.05 from $0.08. If you exclude costs to integrate an acquisition and a loss on the early retirement of debt, earnings were flat.
Windstream is a hold....
VERIZON COMMUNICATIONS INC. $48 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 2.9 billion; Market cap: $139.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.4%; TSINetwork Rating: Average; www. verizon.com) is buying the 45% of Verizon Wireless that it doesn’t already own from U.K.-based Vodafone Group (Nasdaq symbol VOD). Verizon Wireless is a joint venture that sells wireless services to 101.2 million U.S. subscribers.
Verizon will pay $130 billion for Vodafone’s stake, including $58.9 billion in cash. It will also issue $60.2 billion of new common shares to Vodafone shareholders, which will give them 30% of the combined firm. Notes and other compensation will cover the remaining $11.0 billion. Verizon expects to close the deal in the first quarter of 2014.
Meanwhile, strong demand for wireless and highspeed Internet increased the company’s earnings by 20.3% in the third quarter of 2013, to $0.77 a share from $0.64 a year earlier. Revenue rose 4.4%, to $30.3 billion from $29.0 billion.
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Verizon will pay $130 billion for Vodafone’s stake, including $58.9 billion in cash. It will also issue $60.2 billion of new common shares to Vodafone shareholders, which will give them 30% of the combined firm. Notes and other compensation will cover the remaining $11.0 billion. Verizon expects to close the deal in the first quarter of 2014.
Meanwhile, strong demand for wireless and highspeed Internet increased the company’s earnings by 20.3% in the third quarter of 2013, to $0.77 a share from $0.64 a year earlier. Revenue rose 4.4%, to $30.3 billion from $29.0 billion.
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AT&T INC. $34 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 5.3 billion; Market cap: $180.2 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.3%; TSINetwork Rating: Average; www.att.com) is the largest wireless service provider in the U.S., with 109.5 million subscribers.
AT&T continues to profit as its customers upgrade to smartphones, which generate higher revenue than cellphones. About 75% of AT&T’s users on long-term contracts now use smartphones, and it feels this could rise to 90% in the next few years.
The company is also profiting from rising demand for its U-verse package, which uses high-speed fibre optic technology to deliver phone, Internet and TV services. It now has over 10 million U-verse subscribers, up 3.1% from 9.7 million on September 30, 2013.
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AT&T continues to profit as its customers upgrade to smartphones, which generate higher revenue than cellphones. About 75% of AT&T’s users on long-term contracts now use smartphones, and it feels this could rise to 90% in the next few years.
The company is also profiting from rising demand for its U-verse package, which uses high-speed fibre optic technology to deliver phone, Internet and TV services. It now has over 10 million U-verse subscribers, up 3.1% from 9.7 million on September 30, 2013.
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APACHE CORP. $86 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 399.2 million; Market cap: $34.3 billion; Price-to-sales ratio: 2.0; Dividend yield: 0.9%; TSINetwork Rating: Average; www. apachecorp.com) continues to sell some its less important oil and gas properties, including its offshore fields in the Gulf of Mexico and a third of its Egyptian operations. In all, the company expects to raise $4 billion from these sales in 2013.
Apache will use half of the proceeds to pay down its $10.9 billion of long-term debt (as of September 30, 2013), which is equal to 32% of its market cap.
The company is also using the cash to increase production from its North American onshore properties. This approach is much cheaper than offshore drilling and has less political risk. Apache now gets 56% of its production from its onshore fields, up from 32% in 2009.
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Apache will use half of the proceeds to pay down its $10.9 billion of long-term debt (as of September 30, 2013), which is equal to 32% of its market cap.
The company is also using the cash to increase production from its North American onshore properties. This approach is much cheaper than offshore drilling and has less political risk. Apache now gets 56% of its production from its onshore fields, up from 32% in 2009.
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CHEVRON CORP. $122 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $231.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www. chevron.com) is the second-largest integrated oil company in the U.S., after ExxonMobil.
The company plans to spend $39.8 billion on exploration and upgrading its operations in 2014. That’s down 5.2% from the $42 billion it will likely spend in 2013. Chevron will devote 90% of the 2014 capital budget to extracting oil and gas. The remaining 10% will go toward improving its refineries and gas stations.
Among Chevron’s bigger projects is its 47.3%-owned Gorgon natural gas development off Australia’s west coast. Gorgon, which includes a plant that liquefies gas for export, is 75% complete and should start up in 2015. Its reserves will last 40 years.
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The company plans to spend $39.8 billion on exploration and upgrading its operations in 2014. That’s down 5.2% from the $42 billion it will likely spend in 2013. Chevron will devote 90% of the 2014 capital budget to extracting oil and gas. The remaining 10% will go toward improving its refineries and gas stations.
Among Chevron’s bigger projects is its 47.3%-owned Gorgon natural gas development off Australia’s west coast. Gorgon, which includes a plant that liquefies gas for export, is 75% complete and should start up in 2015. Its reserves will last 40 years.
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3M COMPANY $136 (New York symbol MMM; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 665.2 million; Market cap: $90.5 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.3m.com) began operating as the Minnesota Mining & Manufacturing Company in 1902.
3M started off making sandpaper and abrasives for industrial customers. It later developed a variety of other consumer and manufacturing-related goods, such as pressure- sensitive masking and packaging tape, recording tape, reflective highway markings and medical bandages. The company now makes more than 55,000 different items.
The company owns a range of well-known brands, including Post-it notes, Scotch tape, Scotch-Brite household cleaning products, Scotchguard protection and Thinsulate insulation.
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3M started off making sandpaper and abrasives for industrial customers. It later developed a variety of other consumer and manufacturing-related goods, such as pressure- sensitive masking and packaging tape, recording tape, reflective highway markings and medical bandages. The company now makes more than 55,000 different items.
The company owns a range of well-known brands, including Post-it notes, Scotch tape, Scotch-Brite household cleaning products, Scotchguard protection and Thinsulate insulation.
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BCE is one of our long-time favourites. When we first recommended it in our April 1995 issue, we felt it was poised to profit as many of its phone customers signed up for Internet access. The company later cut its risk by unloading its remaining shares in telecom equipment maker Nortel Networks at the peak of the tech boom in 2000.
The company’s outlook remains bright....
The company’s outlook remains bright....