price to sales ratio
RESEARCH IN MOTION INC. $16 (Toronto symbol RIM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.2 million; Market cap: $8.4 billion; Price-to-sales ratio: 0.4; No dividends paid; TSINetwork Rating: Above Average; www.rim.com) has suffered several setbacks in the past few months, including a network outage in October 2011 that stopped or slowed the delivery of emails to its BlackBerry smartphone users. As well, sales of RIM’s PlayBook tablet computer have been slower than expected. That forced RIM to write down unsold inventory.
Excluding unusual items, RIM’s earnings fell 26.8% in its fiscal 2012 third quarter, which ended November 26, 2011, to $667 million, or $1.27 a share. (All amounts except share price and market cap in U.S. dollars.) A year earlier, it earned $911 million, or $1.74 a share. RIM spends 7% of its revenue on research.
Revenue fell 5.9%, to $5.2 billion from $5.5 billion. However, revenue is up 24.0% from $4.2 billion in the second quarter, thanks to the launch of new smartphones and strong sales in the U.K., France, South Africa, Mexico and Argentina. Hardware sales accounted for 79% of RIM’s revenue in the latest quarter, followed by services (19%) and software (2%).
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Excluding unusual items, RIM’s earnings fell 26.8% in its fiscal 2012 third quarter, which ended November 26, 2011, to $667 million, or $1.27 a share. (All amounts except share price and market cap in U.S. dollars.) A year earlier, it earned $911 million, or $1.74 a share. RIM spends 7% of its revenue on research.
Revenue fell 5.9%, to $5.2 billion from $5.5 billion. However, revenue is up 24.0% from $4.2 billion in the second quarter, thanks to the launch of new smartphones and strong sales in the U.K., France, South Africa, Mexico and Argentina. Hardware sales accounted for 79% of RIM’s revenue in the latest quarter, followed by services (19%) and software (2%).
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CGI GROUP INC. $19 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 260.7 million; Market cap: $5.0 billion; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) was our “#1 Stock of the Year” for 2010 and 2011.
The company is Canada’s largest provider of computer-outsourcing services. CGI’s services can automate routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses.
CGI’s earnings jumped 19.9% in its 2011 fiscal year, which ended September 30, 2011, to $435.1 million from $362.8 million a year earlier. CGI spent $305.0 million on share buybacks in fiscal 2011. Due to fewer shares outstanding, earnings per share rose 27.4%, to $1.58 from $1.24. Revenue rose 15.8%, to $4.3 billion from $3.7 billion. If you exclude the negative impact of exchange rates, revenue would have risen 18.9%.
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The company is Canada’s largest provider of computer-outsourcing services. CGI’s services can automate routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses.
CGI’s earnings jumped 19.9% in its 2011 fiscal year, which ended September 30, 2011, to $435.1 million from $362.8 million a year earlier. CGI spent $305.0 million on share buybacks in fiscal 2011. Due to fewer shares outstanding, earnings per share rose 27.4%, to $1.58 from $1.24. Revenue rose 15.8%, to $4.3 billion from $3.7 billion. If you exclude the negative impact of exchange rates, revenue would have risen 18.9%.
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CANADIAN PACIFIC RAILWAY LTD. $69 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 169.7 million; Market cap: $11.7 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.cpr.ca) transports freight between Montreal and Vancouver, and connects with hubs in the U.S. Midwest and Northeast. It gets 25% of its revenue from the U.S.
CP’s revenue rose 16.7%, from $4.6 billion in 2006 to $5.3 billion in 2008, as rising Asian trade pushed up freight volumes. CP’s $1.5-billion purchase of Dakota, Minnesota & Eastern Railroad (DM&E) October 2008 brought in more revenue. DM&E operates a 4,000-kilometre rail network in eight midwestern states.
The recession cut CP’s revenue by 17.7% in 2009 to $4.4 billion. However, revenue rose 13.2%, to $5.0 billion, in 2010. Even with its weather-related problems in the first half of 2011, revenue for the full year probably rose to $5.2 billion.
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CP’s revenue rose 16.7%, from $4.6 billion in 2006 to $5.3 billion in 2008, as rising Asian trade pushed up freight volumes. CP’s $1.5-billion purchase of Dakota, Minnesota & Eastern Railroad (DM&E) October 2008 brought in more revenue. DM&E operates a 4,000-kilometre rail network in eight midwestern states.
The recession cut CP’s revenue by 17.7% in 2009 to $4.4 billion. However, revenue rose 13.2%, to $5.0 billion, in 2010. Even with its weather-related problems in the first half of 2011, revenue for the full year probably rose to $5.2 billion.
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KRAFT FOODS INC. $36 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.8 billion; Market cap: $64.8 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.kraft.com) plans to break itself into two separate, publicly traded companies by the end of 2012. One company will sell snack foods, such as Oreo cookies, Cadbury chocolates, Trident gum and Tang powdered beverages. This business will have annual sales of $32 billion, with 42% of that coming from developing markets, such as China, Brazil and India. The other company will consist of Kraft’s slower-growing grocery-products business, which mainly sells its foods in North American supermarkets. These products include Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Jell-O desserts and Miracle Whip salad dressing. This company will have $16 billion of annual sales....
NEWMONT MINING CORP. $61 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 494.8 million; Market cap: $30.2 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.3%; TSINetwork Rating: Average; www.newmont.com) is one of the world’s largest gold-mining companies. It has major mines in the U.S., Australia and Peru. Newmont gets about 90% of its revenue from gold. It gets the remaining 10% from copper, zinc and other metals. Most of Newmont’s copper comes from its 27.56% stake in the large Batu Hijau mining complex in Indonesia. Combined with financing arrangements the company has with other Batu Hijau shareholders, Newmont’s economic interest in this mine is effectively 44.56%. The company prefers to sell its gold at the market price instead of through long-term hedging contracts that lock in prices. This policy has helped it take full advantage of rising gold prices: Newmont’s average realized gold price jumped 105.7%, from $594 an ounce in 2006 to $1,222 in 2010....
CAMPBELL SOUP CO. $32 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 318.7 million; Market cap: $10.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.campbellsoupcompany.com) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices.
The company’s sales rose 1.7%, from $7.9 billion in 2007 to $8.0 billion in 2008 (fiscal years end July 31). Sales fell to $7.6 billion in 2009, but rose to $7.7 billion in 2011.
The company’s sales rose 1.7%, from $7.9 billion in 2007 to $8.0 billion in 2008 (fiscal years end July 31). Sales fell to $7.6 billion in 2009, but rose to $7.7 billion in 2011.
Erratic earnings set to stabilize
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NEWMONT MINING CORP. $60 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 493.1 million; Market cap: $29.6 billion; Price-to-sales ratio: 2.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.newmont.com) expects its overall copper production will fall to around 160 million pounds in 2012 from 206 million pounds in 2011. That’s because the operators of its 44.56%-owned Batu Hijau open-pit copper mine in Indonesia need time to clear out waste material so they can reach lower depths with higher grades of copper. As well, Newmont expects its copper production costs to jump to between $1.80 and $2.20 per ounce in 2012 from $1.26 in 2011.
The company also expects to produce 5.0 million to 5.2 million ounces of gold in 2012, which is comparable to the 5.2 million ounces it produced in 2011. However, due to rising power and labour costs at its Australian mines, its gold-production costs will jump to between $625 and $675 an ounce from $592 in 2011.
Newmont’s long-term outlook remains bright. Concerns over European sovereign debt should continue to spur gold prices. Copper prices should also rebound in 2012, as global consumption will probably exceed production.
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The company also expects to produce 5.0 million to 5.2 million ounces of gold in 2012, which is comparable to the 5.2 million ounces it produced in 2011. However, due to rising power and labour costs at its Australian mines, its gold-production costs will jump to between $625 and $675 an ounce from $592 in 2011.
Newmont’s long-term outlook remains bright. Concerns over European sovereign debt should continue to spur gold prices. Copper prices should also rebound in 2012, as global consumption will probably exceed production.
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PEPSICO INC. $67 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.6 billion; Market cap: $107.2 billion; Price-to-sales ratio: 1.6; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.pepsico.com) will make and distribute Ocean Spray cranberry drinks in Latin America under a new 20-year deal with Ocean Spray Cranberries, Inc.
The two companies already have a similar deal in the U.S., where Ocean Spray’s volumes have risen 20% since 2006. PepsiCo feels its marketing expertise and distribution networks will help it repeat this success in Latin America.
PepsiCo is a buy.
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The two companies already have a similar deal in the U.S., where Ocean Spray’s volumes have risen 20% since 2006. PepsiCo feels its marketing expertise and distribution networks will help it repeat this success in Latin America.
PepsiCo is a buy.
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CHEVRON CORP. $108 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $216.0 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.chevron.com) recently announced that it had discovered promising new gas wells off the northwest coast of Australia. This was its 13th discovery in the area since 2009.
These discoveries enhance the prospects of Chevron’s Gorgon liquefied natural gas (LNG) project in Australia. Gorgon will convert gas from these offshore fields into a liquid. The company will then ship the LNG on tankers to customers in Asia.
Chevron owns 47% of Gorgon, and will operate it. The company’s share of the $37-billion development cost is $17.4 billion. Gorgon should start producing in 2014. Chevron expects the Australian wells to last 40 years.
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These discoveries enhance the prospects of Chevron’s Gorgon liquefied natural gas (LNG) project in Australia. Gorgon will convert gas from these offshore fields into a liquid. The company will then ship the LNG on tankers to customers in Asia.
Chevron owns 47% of Gorgon, and will operate it. The company’s share of the $37-billion development cost is $17.4 billion. Gorgon should start producing in 2014. Chevron expects the Australian wells to last 40 years.
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WELLS FARGO & CO. $30 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 5.3 billion; Market cap: $159.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.6%; TSINetwork Rating: Average; www.wellsfargo.com) earned $15.0 billion in 2011. That’s up 29.2% from $11.6 billion in 2010. Earnings per share rose 27.6%, to $2.82 from $2.21, on more shares outstanding. More clients are repaying their loans on time. As a result, loan-loss provisions fell 49.9%, to $7.9 billion from $15.8 billion. This was the main reason for earnings gain.
Revenue fell 5.0%, to $80.9 billion from $85.2 billion. Demand for mortgages and credit cards is rising. However, the bank is getting less interest income from borrowers due to today’s low interest rates.
Wells Fargo is still a hold.
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Revenue fell 5.0%, to $80.9 billion from $85.2 billion. Demand for mortgages and credit cards is rising. However, the bank is getting less interest income from borrowers due to today’s low interest rates.
Wells Fargo is still a hold.
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