price to sales ratio

Heinz and Campbell Soup no doubt hope they have as much success expanding in China as Yum Brands and PepsiCo: YUM! BRANDS INC. $49 (New York symbol YUM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 468.6 million; Market cap: $23.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.0%; WSSF Rating: Above Average) was the first fast-food company to enter China (in 1987). China now supplies 40% of Yum’s sales, and 45% of its earnings. Thanks to strong sales growth in China, Yum’s 2010 earnings should rise 15.2%, to $2.50 a share. The stock trades at 19.6 times that estimate....

Clothing sales are rising as the economy continues to recover. However, fashion trends are fickle, and consumers are often quick to switch brands. The six clothing designers and sellers we analyze below own some of the top brand names in the industry. That will help them keep increasing their sales. As well, all six cut costs during the recession. That will let them lower their prices and protect their market shares if sales slow. Still, only three are buys. LIMITED BRANDS INC. $29 (New York symbol LTD; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 322.8 million; Market cap: $9.4 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.1%; WSSF Rating: Average) operates two main retail chains: Victoria’s Secret (lingerie) and Bath & Body Works (soaps and bath oils). It also operates the La Senza lingerie chain in Canada and 30 other countries....

TOYOTA MOTOR CO. ADRs $71 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.6 billion; Market cap: $113.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.4%; WSSF Rating: Above Average) is recalling 1.5 million vehicles to fix a brake problem: a seal could dry out and leak if owners use an unapproved brand of brake fluid. Over time, that could make the car harder to stop. This is much less serious than the sticky gas-pedal and floor-mat problems that forced the company to recall 8.5 million cars and trucks earlier this year. Toyota’s quick response to these latest problems should continue to limit any long-term damage to its reputation. Toyota is a buy.

GENERAL ELECTRIC CO. $16 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.7 billion; Market cap: $171.2 billion; Price-to-sales ratio: 1.1; Dividend yield: 3.0%; WSSF Rating: Above Average) is buying California-based Clarient Inc. (Nasdaq symbol CLRT). Clarient’s advanced technology helps identify genes and other markers in cancer cells. This helps doctors tailor their treatments to individual patients. Demand for accurate cancer diagnoses is rising, and Clarient will help strengthen GE’s health-care operations, which supply about 25% of its revenue. The $580-million price is just 18% of the $3.2 billion, or $0.29 a share, that GE earned in the three months ended September 30, 2010. GE aims to close the deal by the end of this year. GE is a buy.

UNITED TECHNOLOGIES CORP. $74 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 923.4 million; Market cap: $68.3 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.3%; WSSF Rating: Above Average) is buying the 51.1% of U.K.-based Clipper Windpower PLC that it doesn’t already own. Clipper makes turbines and other equipment for wind-power projects. Low natural-gas prices have cut the cost of producing electricity. As well, cash-strapped governments are cutting subsidies to wind producers. However, the Clipper acquisition will only cost United Technologies $112 million. To put this amount in context, the company earned $1.2 billion, or $1.30 a share, in the three months ended September 30, 2010....

STATE STREET CORP. $41 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 501.9 million; Market cap: $20.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 0.1%; WSSF Rating: Extra Risk) provides accounting and other services to mutual funds and pension plans. In the three months ended September 30, 2010, State Street earned $1.08 a share. That’s up 63.6% from $0.66 a year earlier. If you exclude unusual items, such as gains on sales of securities State Street had previously written down, earnings per share would have risen 21.1%, to $0.86 from $0.71. Revenue rose 8.4%, to $2.2 billion from $2.0 billion. In 2009, State Street bought two firms in Europe. That pushed up the company’s custody-fee revenue by 18.7% in the latest quarter. However, despite rising stock markets, fees from managing its clients’investments fell 2.7%. That’s because its customers held more bonds during the quarter, and the company earns lower fees from managing bonds than stocks....

WESTERN UNION CO. $18 (New York symbol WU; Conservative Growth Portfolio, Finance sector; Shares outstanding: 656.2 million; Market cap: $11.8 billion; Price-to-sales ratio: 2.4; Dividend yield: 1.3%; WSSF Rating: Above Average) earned $0.38 a share in the three months ended September 30, 2010. That’s up 15.2% from $0.33 a year earlier. The latest results exclude costs to reorganize Western Union’s money transfer and payments business. This plan cut the company’s expenses by 5% in the latest quarter. Revenue rose 1.3%, to $1.33 billion from $1.31 billion. The company should earn $1.38 a share in 2010. The stock trades at 13.0 times that figure. Western Union is a buy.

TIM HORTONS INC. $37 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 173.9 million; Market cap: $6.4 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.4%; WSSF Rating: Average) is selling half of its Maidstone Bakeries business to Aryzta AG of Switzerland. (Tim Hortons and Aryzta own the bakery through a joint venture.) Based in Brantford, Ontario, Maidstone supplies donuts and other baked goods to Tim Hortons’stores in Canada and the U.S. Tim Hortons will receive $475 million when the sale closes on October 29, 2010 (all amounts except share price and market cap in Canadian dollars). As part of the deal, Maidstone will continue to supply Tim Hortons until 2016. The company could use the proceeds to pay a special dividend, or buy back a large number of shares. Buybacks boost per-share earnings, and give remaining shareholders a larger stake in the company....

MCDONALD’S CORP. $77 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.1 billion; Market cap: $84.7 billion; Price-to-sales ratio: 3.5; Dividend yield: 3.2%; WSSF Rating: Above Average) continues to profit from strong demand for its premium coffees and low-cost meals. In the three months ended September 30, 2010, sales rose 4.3%, to $6.3 billion from $6.0 billion a year earlier. Overall same-store sales rose 6.0%, with the Asia-Pacific region up 8.1%, the U.S. up 5.3% and Europe up 4.1%. Earnings rose 10.1%, to $1.4 billion from $1.3 billion. Earnings per share rose 12.2%, to $1.29 from $1.15, on fewer shares outstanding. Thanks to its strong outlook, McDonald’s has raised its quarterly dividend by 10.9%, to $0.61 a share from $0.55. The new annual rate of $2.44 yields 3.2%....

SNAP-ON INC. $50 (New York symbol SNA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.2 million; Market cap: $2.9 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.4%; WSSF Rating: Average) makes hand and power tools for auto mechanics. It sells its tools through a fleet of franchised vans that visit garages. This method lets Snap-On build closer relationships with its customers, which gives it an edge over its competitors. It also keeps Snap-On’s distribution costs down. New markets have huge potential The company aims to cut its exposure to the cyclical car market. To that end, it is diversifying its operations, including making specialized tools for mining companies, electrical power generators and other industrial customers. Snap-On is also expanding in China, India and other fast-growing markets, where rising prosperity is fuelling demand for new cars....