price to sales ratio
MCDONALD’S CORP. $87 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.0 billion; Market cap: $87.0 billion; Price-to-sales ratio: 3.2; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.mcdonalds.com) is seeing stronger competition from other fast-food chains. The higher U.S. dollar is also undermining the value of its overseas profits.
In the three months ended September 30, 2012, the company’s sales fell 0.2%, to $7.15 billion from $7.17 billion a year earlier. However, if you exclude the negative impact of foreign exchange rates, sales would have risen 4%. Overall same-store sales rose 1.9% in the quarter.
Earnings fell 3.5%, to $1.46 billion from $1.51 billion. Due to fewer shares outstanding, earnings per share fell 1.4%, to $1.43 from $1.45. On a constant-currency basis, earnings per share would have risen 4%. The company also raised its quarterly dividend by 10.0%, to $0.77 a share from $0.70. The new annual rate of $3.08 yields 3.5%.
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In the three months ended September 30, 2012, the company’s sales fell 0.2%, to $7.15 billion from $7.17 billion a year earlier. However, if you exclude the negative impact of foreign exchange rates, sales would have risen 4%. Overall same-store sales rose 1.9% in the quarter.
Earnings fell 3.5%, to $1.46 billion from $1.51 billion. Due to fewer shares outstanding, earnings per share fell 1.4%, to $1.43 from $1.45. On a constant-currency basis, earnings per share would have risen 4%. The company also raised its quarterly dividend by 10.0%, to $0.77 a share from $0.70. The new annual rate of $3.08 yields 3.5%.
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PFIZER INC. $25 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 7.5 billion; Market cap: $187.5 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.pfizer.com) has agreed to buy NextWave Pharmaceuticals Inc.
This private company has developed Quillivant XR, a liquid drug that treats attention deficit/hyperactivity disorder (ADHD). Pfizer’s extensive marketing and distribution operations should help expand sales of Quillivant XR.
Based on future sales of this drug, this purchase could cost Pfizer a total of $700 million. That’s equal to 15% of the $4.7billion, or $0.62 a share, that it earned in the second quarter of 2012. The deal should close by the end of 2012.
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This private company has developed Quillivant XR, a liquid drug that treats attention deficit/hyperactivity disorder (ADHD). Pfizer’s extensive marketing and distribution operations should help expand sales of Quillivant XR.
Based on future sales of this drug, this purchase could cost Pfizer a total of $700 million. That’s equal to 15% of the $4.7billion, or $0.62 a share, that it earned in the second quarter of 2012. The deal should close by the end of 2012.
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ABB LTD. ADRs $19 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $43.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.abb.com) is a leading maker of power technologies for utilities, including transformers, transmission systems and circuit breakers. The Switzerland-based company also makes automation systems and robotics that industrial clients use to make their facilities more productive.
ABB has spent over $7.6 billion on acquisitions, including the cash these companies held, since the start of 2011. Expanding by acquisition adds risk, but these purchases have helped ABB expand into new regions. They also nicely complement its current products.
For example, in January 2011 ABB paid $4.2 billion for Arkansas-based Baldor Electric Co., which makes electric motors and related products, such as conveyor belts, fans and pumps.
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ABB has spent over $7.6 billion on acquisitions, including the cash these companies held, since the start of 2011. Expanding by acquisition adds risk, but these purchases have helped ABB expand into new regions. They also nicely complement its current products.
For example, in January 2011 ABB paid $4.2 billion for Arkansas-based Baldor Electric Co., which makes electric motors and related products, such as conveyor belts, fans and pumps.
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UNITED TECHNOLOGIES CORP. $78 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 911.8 million; Market cap: $71.1 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.utc.com) has six main businesses: Pratt & Whitney (aircraft engines); Otis (elevators); Carrier (heating and air-conditioning equipment); UTC Fire & Security (burglar alarms and fire-protection services); Sikorsky (helicopters); and Hamilton Sundstrand (aircraft controls).
In July 2012, the company completed its $18.4- billion acquisition of North Carolina-based Goodrich Corp., which makes aircraft parts, including landing gear, wheels and brakes.
Meanwhile, United Technologies earned $1.25 bil- lion in the three months ended September 30, 2012. That’s down 3.3% from $1.3 billion a year earlier. Because of more shares outstanding, earnings per share fell 4.2%, to $1.37 from $1.43.
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In July 2012, the company completed its $18.4- billion acquisition of North Carolina-based Goodrich Corp., which makes aircraft parts, including landing gear, wheels and brakes.
Meanwhile, United Technologies earned $1.25 bil- lion in the three months ended September 30, 2012. That’s down 3.3% from $1.3 billion a year earlier. Because of more shares outstanding, earnings per share fell 4.2%, to $1.37 from $1.43.
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GENERAL ELECTRIC CO. $21 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $222.6 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines; aircraft engines; health care equipment; home appliances and lighting; and locomotives.
To cut the risk of further losses following the 2008 / 2009 financial crisis, the company continues to scale back its GE Capital subsidiary, which provides loans and other financial services to GE’s customers. This business now accounts for 31% of GE’s overall revenue and 45% of its earnings.
In the three months ended September 30, 2012, GE’s revenue rose 2.8%, to $36.3 billion from $35.4 billion a year earlier. Revenue from the industrial businesses rose 7.4%, partly because GE bought companies that supply equipment to oil and gas producers. That offset lower sales of wind-power gear. The company continues to shrink GE Capital. As a result, this division’s revenue fell 5.4%. Earnings rose 9.9%, to $3.8 billion from $3.5 billion. Because of fewer shares outstanding, earnings per share rose 12.5%, to $0.36 from $0.32.
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To cut the risk of further losses following the 2008 / 2009 financial crisis, the company continues to scale back its GE Capital subsidiary, which provides loans and other financial services to GE’s customers. This business now accounts for 31% of GE’s overall revenue and 45% of its earnings.
In the three months ended September 30, 2012, GE’s revenue rose 2.8%, to $36.3 billion from $35.4 billion a year earlier. Revenue from the industrial businesses rose 7.4%, partly because GE bought companies that supply equipment to oil and gas producers. That offset lower sales of wind-power gear. The company continues to shrink GE Capital. As a result, this division’s revenue fell 5.4%. Earnings rose 9.9%, to $3.8 billion from $3.5 billion. Because of fewer shares outstanding, earnings per share rose 12.5%, to $0.36 from $0.32.
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RioCan’s units have steadily risen in the past year, mainly because its high, stable distributions continue to attract income-seeking investors. Even after this rise, we feel RioCan still has plenty of growth ahead. It continues to expand in the U.S., and it is diversifying into other real estate projects like office buildings and residential developments. Best of all, its high-quality properties and tenants give it the reliable cash flow it needs to invest in new growth projects and maintain—and raise—its distributions. RIOCAN REAL ESTATE INVESTMENT TRUST $27 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 291.3 million; Market cap: $7.9 billion; Price-to-sales ratio: 5.0; Dividend yield: 5.1%; TSINetwork Rating: Average; www.riocan.com) is Canada’s largest real estate investment trust (REIT)....
AGRIUM INC. $102 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $16.1 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.0%; TSINetwork Rating: Average; www.agrium.com) has gained 30% since May 2012. That’s partly due to pressure from activist investor Jana Partners LLC, which owns roughly 4% of Agrium’s stock. Jana wants Agrium to spin off its retail business as a separate company. This division has 872 stores in North America, South America and Australia that sell seed, fertilizer and other products to farmers. They also supply two-thirds of Agrium’s revenue and half of its earnings. Jana feels the spinoff, combined with cost cuts at the retail division, could potentially unlock $50 a share of value. Agrium disputes these figures and feels that the steady revenue streams from the retail business cut its exposure to volatile fertilizer prices, as well as its overall risk....
These five electric utilities are using their strong cash flows to make acquisitions and invest in new projects. These moves will enhance their long-term prospects and give them more cash for dividends. However, not all are buys right now. TRANSCANADA CORP. $44 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 704.0 million; Market cap: $31.0 billion; Price-to-sales ratio: 3.6; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.transcanada.com) is mainly known for its natural gas and oil pipelines. However, the company continues to expand its electrical-power business. TransCanada’s 19 power plants in Canada and the U.S. now supply 30% of its revenue. The company has agreed to build a new gas-fired power plant near Napanee, Ontario, as part of a deal with the Ontario Power Authority (OPA), which regulates the province’s power producers. This new plant will replace a plant that TransCanada previously agreed to build in Oakville, Ontario....
IMPERIAL OIL LTD. $45 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $38.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) is getting a lot of inquiries about an oil refinery it is selling in Dartmouth, Nova Scotia. Imperial is selling this facility because it uses higher priced oil from the North Sea instead of cheaper crude from western Canada. After the sale, it will still own three refineries. The company aims to complete the sale in early 2013. If it can’t, it will probably convert the refinery into a storage terminal. Imperial Oil is a buy.
ENCANA CORP. $21 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $15.5 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.7%; TSINetwork Rating: Average; www.encana.com) owns the Deep Panuke offshore natural gas field south of Nova Scotia. The project’s cost has risen to $960 million from an earlier estimate of $750 million because Encana had problems building the drilling platform (all amounts except share price and market cap in U.S. dollars). To put that in context, the company’s cash flow was $794 million, or $1.08 a share, in the quarter ended June 30, 2012. Even with these delays, Encana still aims to begin producing gas at Deep Panuke by the end of 2012. At full capacity, this new project will increase the company’s daily gas production by 9%....