price to sales ratio

DUN & BRADSTREET CORP. $76 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 44.6 million; Market cap: $3.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.0%; TSINetwork Rating: Average; www.dnb.com) shot up to around $84 in August 2012 on speculation that the company may sell itself. However, reports that it has stopped looking for a buyer caused the stock to fall to its current price. Meanwhile, the slow economy is hurting demand for Dun & Bradstreet’s credit reports. In the third quarter of 2012, its revenue fell 6.0%, to $413.2 million from $439.4 million a year earlier. However, savings from a cost-cutting plan pushed up its earnings by 13.4%, to $79.4 million from $70.0 million. Due to fewer shares outstanding, earnings per share rose 23.9%, to $1.76 from $1.42. Dun & Bradstreet is still a hold.

New car sales continue to rebound strongly since the end of the 2008-2009 recession. That’s partly because more consumers in developing countries can now afford new cars. Low interest rates are also spurring automobile sales. These three carmakers offer a good way for investors to gain exposure to rapidly growing emerging markets with moderate risk. Their low p/e’s also add to their appeal. Still, we see only two as buys right now. TOYOTA MOTOR CO. ADRs $84 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $142.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.toyota.com) is the world’s largest carmaker based on sales. Japan is the company’s largest market, accounting for 28% of its revenue, followed by North America (26%), Asia (19%), Europe (9%) and the rest of the world (18%)....

EBAY INC. $49 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $63.7 billion; Price-to-sales ratio: 4.6; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) aims to profit from rising demand for online shopping in China through a new alliance with Xiu.com, a leading Chinese seller of luxury goods. Under the deal, the partners will launch a new website, ebay.xiu.com, which will let certain U.S. retailers sell their goods at fixed prices. The sellers will then send the orders they receive from the site to eBay’s Dallas warehouse, which will forward the goods to China. Xiu.com will handle local shipping and customer service. eBay is a buy.

HEWLETT-PACKARD CO. $12 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.0 billion; Market cap: $24.0 billion; Price-to-sales ratio: 0.2; Dividend yield: 4.4%; TSINetwork Rating: Above Average; www.hp.com) paid $11.1 billion in August 2011 for U.K.-based Autonomy Corp., which makes software that helps businesses organize information in a variety of formats, including email, web pages and documents. The company now claims that improper accounting policies made Autonomy look more profitable that it really was. As a result, it wrote down the value of this purchase by $8.8 billion. Hewlett will try to recover some of these losses through lawsuits. However, that could take years. As well, sales of the company’s computers and printers continue to decline as consumers shift to tablet computers....

New environmental regulations are forcing these two power companies to close their coal-fired plants or install new pollution-control equipment. However, regulators are reluctant to let them pass these costs on to their customers. Even so, both companies should be able to maintain their current dividends. AMEREN CORP. $29 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $7.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 5.5%; TSINetwork Rating: Average; www.ameren.com) sells power and natural gas to 3.3 million clients in Illinois and Missouri. In the three months ended September 30, 2012, Ameren’s earnings fell 15.2%, to $323 million, or $1.33 a share. A year earlier, it earned $381 million, or $1.57 a share. These figures exclude unusual items, such as a writedown of a coal-fired power plant....

NCR CORP. $24 (New York symbol NCR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 159.9 million; Market cap: $3.8 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Average; www.ncr.com) has won a contract to install 10,000 of its self-checkout systems at more than 1,200 Wal-Mart stores in the U.S. These devices let shoppers pay for their purchases without a cashier. That cuts the retailer’s labour costs, speeds up checkout times and encourages repeat visits. The company did not say how much this contract is worth. However, Wal-Mart’s purchase should make it easier for NCR to sell its systems to other big retailers. NCR is a buy.

ALCOA INC. $8.27 (New York symbol AA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.1 billion; Market cap: $9.1 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.5%; TSINetwork Rating: Average; www.alcoa.com) has completed the sale of its Tapoco hydroelectric dams in Tennessee and North Carolina. These facilities supply power to Alcoa’s nearby aluminum smelter. The company recently shut down parts of the smelter, so it no longer needs this power. Alcoa received $600 million, or 7% of its market cap, for the Tapoco assets. The company did not say what it would do with the cash, but it could use it to pay down its long-term debt of $8.4 billion. Alcoa is a buy....

SONY CORP. ADRs $10 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $10.0 billion; Price-to-sales ratio: 0.1; Dividend yield: 3.1%; TSINetwork Rating: Average; www.sony.com) has agreed to buy 11% of distressed Japanese camera maker Olympus for $640 million. In addition, the companies will work together on new medical-imaging equipment that includes Sony’s TV technologies. They will also share digital camera technology. Sony feels this investment will help cut its reliance on its struggling TV set business. To pay for this purchase, Sony is selling $1.9 billion of convertible bonds due in 2017. That will increase its long-term debt to $13.1 billion, or a high 1.3 times its market cap. As well, if all bondholders convert, the number of shares outstanding would rise by 15.6%. That would dilute the holdings of current shareholders. Sony is still a hold.

BAXTER INTERNATIONAL INC. $66 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 549.4 million; Market cap: $36.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.7%; TSINetwork Rating: Average; www.baxter.com) makes medical products, such as intravenous pumps and kidney dialysis equipment. It also makes vaccines and drugs. Half of its sales come from single-use products that need to be continually reordered. Demand for the company’s products continues to improve, particularly as an aging population needs more medical devices and drugs. Baxter’s sales rose 23.4%, from $11.3 billion in 2007 to $13.9 billion in 2011. Earnings rose 36.1%, from $1.8 billion in 2007 to $2.5 billion in 2011. The company is an aggressive buyer of its own shares. Because of a 10% drop in the number of shares outstanding, earnings per share jumped 54.5%, from $2.79 to $4.31....

BAXTER INTERNATIONAL INC. $66 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 549.4 million; Market cap: $36.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.7%; TSINetwork Rating: Average; www.baxter.com) makes medical products, such as intravenous pumps and kidney dialysis equipment. It also makes vaccines and drugs. Half of its sales come from single-use products that need to be continually reordered.

Demand for the company’s products continues to improve, particularly as an aging population needs more medical devices and drugs. Baxter’s sales rose 23.4%, from $11.3 billion in 2007 to $13.9 billion in 2011.

Earnings rose 36.1%, from $1.8 billion in 2007 to $2.5 billion in 2011. The company is an aggressive buyer of its own shares. Because of a 10% drop in the number of shares outstanding, earnings per share jumped 54.5%, from $2.79 to $4.31.

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