price to sales ratio

ARKANSAS BEST CORP. $26 (Nasdaq symbol ABFS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 25.0 million; Market cap: $650.0 million; Price-to-sales ratio: 0.5; WSSF Rating: Average) specializes in “less-than-truckload” shipping. This involves loading freight from a number of customers onto a single truck. Arkansas Best carries a range of goods, including food, textiles, clothing and furniture. The company operates in the U.S., Canada and Mexico. In the three months ended September 30, 2009, Arkansas Best’s total tonnage hauled fell 10.1% from a year earlier. However, it rose 5.8% from the previous quarter. As well, weak demand is forcing the company to lower its prices to stay competitive. As a result, Arkansas Best’s revenue fell 19.5% in the most recent quarter, to $399.0 million from $495.8 million a year earlier. The company lost $0.23 a share, compared to earnings of $0.60....

FEDEX CORP. $74 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 312.5 million; Market cap: $23.1 billion; Price-to-sales ratio: 0.7; WSSF Rating: Average) delivers packages and documents in the U.S. and over 220 other countries. FedEx earned $0.58 a share in its first quarter, which ended August 31, 2009. That’s down 52.8% from $1.23 a year earlier. Revenue fell 19.7%, to $8 billion from $10 billion. Like most shipping companies, FedEx added a surcharge to its fees when fuel costs were rising. But now that oil prices have fallen to around $77 a barrel from last year’s peak of $148, FedEx is getting less revenue from these surcharges. Despite the drop in fuel-surcharge revenue, lower fuel costs should help FedEx increase its profits as an economic recovery pushes up shipping volumes. As well, European-based courier DHL Express exited the U.S. domestic delivery market last year due to growing losses. This gives FedEx an opportunity to expand its market share....

INVACARE CORP. $23 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.1 million; Market cap: $738.3 million; Price-to-sales ratio: 0.4; WSSF Rating: Average) makes wheelchairs, motorized scooters and other mobility and home-care products. Invacare spends much less on research than Baxter, Bard and Beckman— typically less than 2% of its revenue. That’s because it mainly focuses on improving its current products, rather than developing new ones. Simplifying its products, along with shifting production to low-cost countries, has also lowered the company’s operating costs. In the three months ended September 30, 2009, earnings before restructuring costs rose 23.8%, to $0.52 a share from $0.42 a year earlier. Sales fell 6.0%, to $434.0 million from $461.8 million. If you exclude an acquisition and currency-exchange rates, sales would have fallen by 2.2%....

C.R. BARD INC. $76 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 96.5 million; Market cap: $7.3 billion; Price-to-sales ratio: 2.9; WSSF Rating: Above Average) makes medical devices in four main areas: urology products, such as drainage and incontinence devices (29% of 2008 sales); vascular products, such as stents and catheters (26%); oncology products that detect and treat various types of cancer (26%); and surgical tools (15%). Other medical products supply the remaining 4%. Bard is looking to add to the number of products it offers over the next few years. This should help it hang onto more of its customers, which mainly consist of hospitals and clinics. The company spends 8% of its revenue on research, and is increasing this spending to develop more new products. Bard also plans to buy other medical-device makers. The company’s strong balance sheet will help support both its research and its acquisition efforts. It holds cash of $632.1 million, or $6.55 a share, and its total debt is just $149.8 million. Bard earned $129.5 million in the three months ended September 30, 2009. That’s up 15.2% from $112.4 million a year earlier. Earnings per share climbed 20.2%, to $1.31 from $1.09, on fewer shares outstanding. Sales rose 3.3%, to $637.0 million from $616.8 million. Bard gets 30% of its sales from outside the U.S., so the higher U.S. dollar hurt the value of its overseas sales. If you disregard currency rates, Bard’s sales would have risen by 6%....

BECKMAN COULTER INC. $66 (New York symbol BEC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 68.6 million; Market cap: $4.5 billion; Price-to-sales ratio: 1.6; WSSF Rating: Average) makes lab equipment that doctors and researchers use to detect substances in bodily fluids. Beckman gets 90% of its sales from hospitals and clinics. Research labs account for the remaining 10%. In August 2009, Beckman paid $780 million for the diagnostic-systems business of Olympus Corp. of Japan. This was a big purchase for Beckman, which earned $233.9 million, or $3.63 a share, in 2008. To help pay for this business, the company issued $495 million in new notes and sold $240 million of new common shares. As of June 30, 2009, Beckman’s long-term debt was just $1.3 billion (29% of market cap), so it has plenty of room for further borrowings....

BAXTER INTERNATIONAL INC. $55 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 602.7 million; Market cap: $33.1 billion; Price-to-sales ratio: 2.7; WSSF Rating: Average) makes medical equipment through three main divisions. BioScience (43% of 2008 sales), makes vaccines and drugs; Medical Delivery (37%) makes intravenous equipment and systems; and Renal (19%) makes dialysis equipment. Other products account for the remaining 1% of sales. Baxter spends about 7% of its revenue on research. The resulting new products should help it maintain its leading position in key markets. The company is expanding its drug operations, which generate higher profits than its other products. A good example is Advate, a hemophilia drug that contains no human or animal proteins. This greatly cuts the risk of disease. Since its launch in 2004, Advate has claimed 70% of the U.S. hemophilia-drug market....

GENERAL MILLS INC. $65 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 326.6 million; Market cap: $21.2 billion; Price-to-sales ratio: 1.5; WSSF Rating: Above Average) is the second-largest cereal maker in the U.S., after Kellogg. Its main brands include Cheerios, Wheaties, Lucky Charms, Total and Chex. The company also makes a wide variety of other foods. These include Yoplait yogurt, Green Giant canned and frozen vegetables, Betty Crocker baking mixes, Pillsbury frozen dough, Progresso canned soups and Haagen-Dazs ice cream. General Mills has three main divisions: The U.S. retail division (68% of sales) sells products to supermarkets and other mass merchandisers. (Wal-Mart accounts for around 20% of the company’s total sales.) The international division (18% of sales) manages General Mills’ overseas operations. The bakeries and food-services division (14%) mainly sells to restaurants, school cafeterias and vending-machine operators....

Consumer stocks tend to add stability to a portfolio. That’s because these firms sell items, like food, that consumers must buy, regardless of the direction of the economy. General Mills is a top choice in the Consumer sector. The company has been cutting expenses and raising prices in response to higher ingredient costs. This should spur long-term earnings growth, especially now that commodity prices have fallen. Lower costs will also free up cash for expansion and dividends. Moreover, General Mills should benefit from its growing international presence, as some countries may well see a faster recovery (and corresponding rise in consumer spending) than others. GENERAL MILLS INC. $65 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 326.6 million; Market cap: $21.2 billion; Price-to-sales ratio: 1.5; WSSF Rating: Above Average) is the second-largest cereal maker in the U.S., after Kellogg. Its main brands include Cheerios, Wheaties, Lucky Charms, Total and Chex....

YUM! BRANDS INC. $34 (New York symbol YUM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 467.7 million; Market cap: $15.9 billion; Price-to-sales ratio: 1.5: WSSF Rating: Above Average) is a fast-food operator whose main brands include Kentucky Fried Chicken. “Colonel” Harland Sanders, originator of the KFC recipe, turned himself into the personification of the brand. He was its spokesperson until his death in 1980. Yum recently hired an actor, dressed him up like Colonel Sanders, and sent him to United Nations headquarters in New York. The purpose of the stunt was to publicize Yum’s new grilled chicken as an alternative to its signature fried chicken. The actor asked Ban Ki-moon, UN Secretary General, to register the “Grilled Nation” of grilled chicken eaters as the UN’s 193rd member state. The stunt probably offended some, but the free publicity and word of mouth that Yum gets should vastly outweigh any loss of business....

Medical-device sales have suffered lately, partly because of the recession. As well, proposed reforms to the U.S. health-care system could limit or cut the amount that hospitals and clinics can recoup from insurance companies. This could leave them with less to spend on medical devices. However, these are essential products, so sales should rebound over the next few months, regardless of the recovery’s strength or the outcome of the health-care debate. Still, only three of these medical-device makers are buys right now. BAXTER INTERNATIONAL INC. $55 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 602.7 million; Market cap: $33.1 billion; Price-to-sales ratio: 2.7; WSSF Rating: Average) makes medical equipment through three main divisions. BioScience (43% of 2008 sales), makes vaccines and drugs; Medical Delivery (37%) makes intravenous equipment and systems; and Renal (19%) makes dialysis equipment. Other products account for the remaining 1% of sales....