price to sales ratio

INTERNATIONAL BUSINESS MACHINES CORP. $170 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $204.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.ibm.com) has raised its quarterly dividend by 15.4%, to $0.75 a share from $0.65. The new annual rate of $3.00 yields 1.8%. This is the 16th consecutive year that IBM has raised its dividend. The computer maker also plans to buy back $8 billion of its common shares. Combined with $4.7 billion remaining on its previous authorization, IBM can now buy back $12.7 billion of its stock. That’s equal to 6% of its market cap. IBM is a buy.

EBAY INC. $34 (Nasdaq symbol EBAY; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $44.2 billion; Price-to-sales ratio: 4.7; No dividends paid; TSINetwork Rating: Above Average; www.ebay.com) is paying an undisclosed sum for privately held where.com, which gives mobile-phone users listings for nearby restaurants and shops. That allows advertisers to offer special deals to people who are near their businesses. eBay plans to integrate its PayPal e-commerce system with where.com’s mobile-phone software. That will let customers use their phones to electronically pay for goods and services offered by where.com’s clients. eBay aims to complete this purchase by the end of June 2011. eBay is a buy.

Fast-food companies like McDonald’s, Yum Brands and Tim Hortons (this issue) face rising labour and food costs. However, their well-known brands make it easier for them to pass along higher costs to their customers, and keep raising their dividends. International expansion further enhances their prospects. MCDONALD’S CORP. $78 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.0 billion; Market cap: $78.0 billion; Price-to-sales ratio: 3.3; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.mcdonalds.com) is the world’s largest fast-food restaurant chain by revenue. It has 32,800 restaurants that mainly serve hamburgers and french fries. Franchisees own 80% of these outlets. McDonald’s gets 65% of its sales from overseas. The company continues to profit from new menu items, such as breakfast oatmeal. As well, its premium coffees are helping it compete with Starbucks....

TIM HORTONS INC. $49 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 166.9 million; Market cap: $8.2 billion; Price-to-sales ratio: 3.0; Dividend yield: 1.5%; TSINetwork Rating: Average; www.timhortons.com) operates 3,148 coffee-and-donut stores in Canada, plus a further 602 in the U.S. The company recently announced its first expansion outside North America. Dubai-based Apparel Group will open up to 120 Tim Hortons outlets in the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman in the next five years. The recent wave of political unrest in the Middle East could hinder this expansion. However, Apparel will own and operate these outlets, so Tim Hortons’ risk is low....

Microsoft and Adobe should see a continued rise in demand for their software as the improving economy prompts businesses to upgrade their computers. Both firms also spend heavily on research, which helps them dominate their markets. However, we prefer Microsoft due to its steadier cash flows and dividend. MICROSOFT CORP. $26 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $218.4 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.microsoft.com) is the world’s largest software company. It gets 75% of its revenue from its Windows operating system and its Office suite of business programs. In its 2011 second quarter, which ended December 31, 2010, Microsoft’s earnings fell 0.4%, to $6.6 billion from $6.7 billion a year earlier. However, earnings per share rose 4.1%, to $0.77 from $0.74, on fewer shares outstanding. Revenue rose 4.9%, to $20.0 billion from $19.0 billion....

FAIR ISAAC CORP. $30 (New York symbol FICO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 40.1 million; Market cap: $1.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 0.3%; TSINetwork Rating: Average; www.fairisaac.com) continues to see slow sales of its FICO software, which lets creditors use a customer’s information to calculate a credit score. That’s because high unemployment continues to hold back demand for new loans. In response, Fair Isaac will cut 9% of its workforce and combine certain facilities. These moves will cost it $0.18 a share. However, the resulting savings should raise its earnings per share by $0.30, to $1.87, in the fiscal year ending September 30, 2011. The stock trades at 16.0 times the new estimate. Fair Isaac is a hold.

GANNETT CO. INC. $15 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 240.2 million; Market cap: $3.6 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.1%; TSINetwork Rating: Average; www.gannett.com) reported revenue of $1.25 billion in the three months ended March 27, 2011. That’s down 3.7%, from $1.3 billion a year earlier. The company is seeing lower advertising revenue at its 82 newspapers, including its flagship paper, USAToday, and its 23 TV stations. That’s mainly because its 2010 revenue benefited from advertising tied to the Olympics and the U.S. mid-term elections. Earnings fell 16.3% in the quarter, to $0.41 a share from $0.49. These figures exclude costs related to job cuts and closing facilities. These moves cut Gannett’s operating costs by 2.2% in the latest quarter. Gannett is a buy....

LIMITED BRANDS INC. $41 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 318.4 million; Market cap: $13.1 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.limitedbrands.com) operates two main retail chains: Victoria’s Secret (lingerie) and Bath & Body Works (soaps and bath oils). This dividend-paying stock also operates the La Senza chain in Canada and 40 other countries. Sales fell 19.1%, from $10.7 billion in 2007 to $8.6 billion in 2010 (fiscal years end January 31). That’s mainly because it sold 75% of its Limited and Express clothing chains in 2007. Sales in rose 11.4%, to $9.6 billion, in 2011. Earnings rose 12.5%, from $1.68 a share in 2007 to $1.89 a share in 2008, but fell 65.6% to $0.65 a share in 2009. However, earnings soared to $2.42 a share in 2011. Excluding an investment gain, Limited earned $2.06 a share in 2011....

TENNANT CORP. $41 (New York symbol TNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 19.1 million; Market cap: $783.1 million; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.tennantco.com) makes industrial floor-cleaning equipment, including scrubbers, sweepers and polishers. It also makes cleaning equipment for garages, stadiums, parking lots and city streets. Tennant’s clients are mainly businesses and municipal governments. Tennant continues to see strong demand for its “ec-H2O” floor-scrubbing machine, which uses electricity to make tap water act like a detergent. That eliminates the need for soaps and cleaning agents, and lowers the machine’s operating costs. Strong demand for the ec-H2O is the main reason why Tennant earned $5.9 million, or $0.30 a share, in the three months ended March 31, 2011. That’s up 43.4% from $4.1 million, or $0.21 a share, a year earlier. Sales rose 15.0%, to $172.6 million from $150.1 million....

BRIGGS & STRATTON CORP. $23 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 50.3 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.briggsandstratton.com) is the world’s largest lawnmower engine maker. This business accounts for 62% of Briggs’sales. It gets the remaining 38% of its sales by making other home and garden equipment, such as generators, pressure washers and snow blowers. The weak U.S. economy has weighed on Briggs’ sales. In response, the company recently closed a plant in Wisconsin. Due to $4.6 million in restructuring and refinancing charges, Briggs lost $1.3 million, or $0.03 a share, in its second quarter, which ended December 26, 2010. A year earlier, it earned $3.0 million, or $0.06 a share. Sales rose 14.6%, to $450.3 million from $393.0 million. The company sold more engines to European and Asian manufacturers. It also sold more snow blowers, lawn mowers and pressure washers....