price to sales ratio
IMPERIAL OIL LTD. $48 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $40.7 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) is Canada’s third-largest publicly traded oil company, after Suncor and Canadian Natural Resources Ltd. Imperial is a 69.6%-owned subsidiary of U.S.-based ExxonMobil Corp. (New York symbol XOM).
Higher oil prices pushed up Imperial’s earnings by 52.5% in 2011, to $3.4 billion, or $3.95 a share. In 2010, it earned $2.2 billion, or $2.59 a share. Revenue rose 22.4%, to $30.7 billion from $25.1 billion. Cash flow per share rose 33.0%, to $4.70 from $3.53.
Imperial gets most of its oil from its Cold Lake oil sands project in Alberta. In 2011, Cold Lake’s daily production rose 11.1%, to a record 160,000 barrels from 144,000 barrels in 2010. That offset lower production of conventional oil and natural gas.
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Higher oil prices pushed up Imperial’s earnings by 52.5% in 2011, to $3.4 billion, or $3.95 a share. In 2010, it earned $2.2 billion, or $2.59 a share. Revenue rose 22.4%, to $30.7 billion from $25.1 billion. Cash flow per share rose 33.0%, to $4.70 from $3.53.
Imperial gets most of its oil from its Cold Lake oil sands project in Alberta. In 2011, Cold Lake’s daily production rose 11.1%, to a record 160,000 barrels from 144,000 barrels in 2010. That offset lower production of conventional oil and natural gas.
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SUNCOR ENERGY INC. $35 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $56.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; TSINetwork Rating: Average; www.suncor.com) became Canada’s largest integrated oil company in 2009, when it merged with Petro-Canada. It gets 60% of its production from its oil sands projects in Alberta; the remaining 40% is conventional oil and natural gas. Suncor also operates four refineries and 1,500 gas stations under the Petro-Canada banner.
Thanks to a 27.5% jump in its average realized oil price, Suncor’s earnings rose 12.4% in 2011, to $4.3 billion from $3.8 billion in 2010.
Earnings per share rose 9.9%, to $2.67 from $2.43, on more shares outstanding. If you exclude unusual items, such as gains and losses on asset sales, earnings per share would have jumped 115.0%, to $3.59 from $1.67. Cash flow per share rose 46.0%, to $6.16 from $4.22.
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Thanks to a 27.5% jump in its average realized oil price, Suncor’s earnings rose 12.4% in 2011, to $4.3 billion from $3.8 billion in 2010.
Earnings per share rose 9.9%, to $2.67 from $2.43, on more shares outstanding. If you exclude unusual items, such as gains and losses on asset sales, earnings per share would have jumped 115.0%, to $3.59 from $1.67. Cash flow per share rose 46.0%, to $6.16 from $4.22.
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GENNUM CORP. $13.50 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.5 million; Market cap: $477.8 million; Price-to-sales ratio: 3.5; Dividend yield: 1.0%; TSINetwork Rating: Average; www.gennum.com) soared 119% in one day after the company accepted a $13.55-a-share takeover offer from U.S.-based Semtech Corp. (Nasdaq symbol SMTC). It’s clear that Semtech shares our high opinion of this well-managed junior company.
Gennum went through a sharp setback in the recession, as TV broadcasters had less to spend on the company’s equipment, which lets them store, edit and transfer video signals.
That’s why the stock fell from $14.50 in January 2007 to just $3.50 in December 2008. It rebounded to $8.35 in February 2011, but moved down to $5.75 in December 2011.
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Gennum went through a sharp setback in the recession, as TV broadcasters had less to spend on the company’s equipment, which lets them store, edit and transfer video signals.
That’s why the stock fell from $14.50 in January 2007 to just $3.50 in December 2008. It rebounded to $8.35 in February 2011, but moved down to $5.75 in December 2011.
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ENBRIDGE INC. $39 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 779.2 million; Market cap: $30.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.enbridge.com) gets 85% of its revenue by operating pipelines that pump crude oil and natural gas from western Canada to eastern Canada and the U.S. The company’s pipelines handle 65% of all western Canadian crude oil exports.
The remaining 15% of revenue mainly comes from distributing natural gas to 2 million consumers in Ontario, Quebec, New Brunswick and New York State.
Enbridge’s revenue rose 51.5%, from $10.6 billion in 2006 to $16.1 billion in 2008. Revenue fell 22.7% in 2009, to $12.5 billion, as the recession cut gas sales and prices. New pipelines pushed up revenue by 21.3%, to $15.1 billion, in 2010.
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The remaining 15% of revenue mainly comes from distributing natural gas to 2 million consumers in Ontario, Quebec, New Brunswick and New York State.
Enbridge’s revenue rose 51.5%, from $10.6 billion in 2006 to $16.1 billion in 2008. Revenue fell 22.7% in 2009, to $12.5 billion, as the recession cut gas sales and prices. New pipelines pushed up revenue by 21.3%, to $15.1 billion, in 2010.
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FORTIS INC. $33 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 186.9 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.fortis.ca) is the main electricity supplier in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, the U.S. and the Cayman Islands.
Fortis had hoped to buy Central Vermont Public Service Corp. (New York symbol CV), which distributes electricity in Vermont, but it was outbid by Quebec natural gas distributor Gaz Metro LP. As a result, Fortis received a breakup fee of $11 million (after tax). Fortis also sold a 40% stake in its power poles in Newfoundland for $46 million. This cash will help the company pursue more acquisitions in the U.S.
Fortis probably earned $1.69 a share in 2011. The stock trades at 19.5 times that figure. It also trades at 18.8 times Fortis’s projected 2012 earnings of $1.76 a share. These are high p/e ratios for a utility that gets over 90% of its revenue from slow-growing regulated businesses.
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Fortis had hoped to buy Central Vermont Public Service Corp. (New York symbol CV), which distributes electricity in Vermont, but it was outbid by Quebec natural gas distributor Gaz Metro LP. As a result, Fortis received a breakup fee of $11 million (after tax). Fortis also sold a 40% stake in its power poles in Newfoundland for $46 million. This cash will help the company pursue more acquisitions in the U.S.
Fortis probably earned $1.69 a share in 2011. The stock trades at 19.5 times that figure. It also trades at 18.8 times Fortis’s projected 2012 earnings of $1.76 a share. These are high p/e ratios for a utility that gets over 90% of its revenue from slow-growing regulated businesses.
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Visa has gained nearly 53% since we first recommended it at $76 in our December 2010 issue. And we think the company still has lots of growth ahead. That’s partly because Visa is in a strong position to profit from the global surge in e-commerce and cashless transactions. At the same time, its trusted brand will help it keep expanding in fast-growing markets like Asia and Latin America. Moreover, Visa is a financial intermediary, so it doesn’t lose money if cardholders fail to pay their bills. Instead, banks that issue Visa cards assume liability, set repayment terms and evaluate customer creditworthiness. That cuts Visa Inc.’s risk....
WAL-MART STORES INC. $59 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $200.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.walmart.com) is buying 51% of Yihaodian, a Chinese company that sells groceries, clothing, consumer electronics and other goods over the Internet. Wal-Mart did not say how much it is paying for this investment, but it already owns a minority stake in Yihaodian. This familiarity cuts the risk of an unpleasant surprise. As well, Wal-Mart’s expertise will help this company expand sales and cut costs. The deal should close later this year. This is the latest in a series of acquisitions that have expanded Wal-Mart’s overseas operations. That’s helping it offset slower growth in the U.S., which accounts for 60% of its overall sales....
Car sales in the U.S. continue to rise in the wake of the recession. Overseas sales are also improving, because more consumers in developing countries can now afford cars. However, the auto industry remains highly cyclical and intensely competitive. As well, continued high unemployment in the U.S. and economic uncertainty in Europe could weaken car sales. Still, the long-term outlook for these three carmakers remains bright. Toyota and Honda are recovering from natural disasters in Japan and Thailand, while Ford is enjoying the benefits of a major restructuring. Not all three are buys right now, but we feel they have stronger prospects than General Motors. 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: 0.7; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.toyota.com) is Japan’s largest automobile maker and the world’s second-biggest after General Motors. Toyota also makes industrial equipment, such as forklifts and prefabricated housing. Like most carmakers, it offers vehicle loans through its financing division....
SNAP-ON INC. $61 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.4 million; Market cap: $3.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.2%; TSINetwork Rating: Average; www.snapon.com) makes tools for auto mechanics. That puts the company in a great position to gain from rising car sales. Snap-On sells its products through a fleet of franchised vans that visit garages. It also makes specialized tools for mining companies, electrical power utilities and other industrial customers. Snap-On’s revenue rose 11.1% in 2011, to $3.0 billion from $2.7 billion in 2010. Earnings rose 42.2%, to $265.2 million, or $4.52 a share, from $186.5 million, or $3.19 a share. The company will spend $60 million to $70 million to expand and upgrade its operations in 2012. It’s particularly interested in growing in developing countries. Right now, it gets 59% of its revenue from North America....
We’ve often pointed out that spinoffs are a great way for companies to unlock value. Here are two spinoffs, one old (Agilent) and one new (Motorola Solutions), that we see as buys for long-term gains. MOTOROLA SOLUTIONS INC. $50 (New York symbol MSI; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 325.5 million; Market cap: $16.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.8%; TSINetwork Rating: Average; www.motorolasolutions.com) took its current form on January 4, 2011, following the breakup of the old Motorola Inc. The company makes specialized equipment, including bar-code scanners and radios for emergency vehicles. Governments supply 65% of its revenue; the remaining 35% comes from businesses. In 2011, Motorola Solutions earned $888 million, or $2.61 a share. That’s up 42.5% from $623 million, or $1.84 a share, in 2010. These figures exclude several unusual items, mainly costs related to the spinoff from Motorola Inc. Sales rose 7.7%, to $8.2 billion from $7.6 billion....