price to sales ratio

BCE INC. $27 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 767.2 million; Market cap: $20.7 billion; Price-to-sales ratio: 1.2; SI Rating: Above Average) has 7.2 million residential and business telephone customers in Ontario and Quebec. It also has 6.6 million wireless subscribers across Canada, and sells other services, including Internet access and satellite TV. BCE also owns 44% of Bell Aliant, which has 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. Bell Aliant transferred most of its wireless business to BCE as part of the deal that created the trust in 2006. Last year, BCE began a major cost-cutting program in response to a high-profile takeover bid by a private group headed by the Ontario Teachers’ Pension Plan....

We rate BCE and Bell Aliant as “Above Average,” so they both have about the same risk level. Bell Aliant offers higher income, but BCE reinvests more of its cash flow. That reinvestment, plus its wider range of operations, gives the company better growth prospects. This makes BCE a better choice for new buying. BCE INC. $27 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 767.2 million; Market cap: $20.7 billion; Price-to-sales ratio: 1.2; SI Rating: Above Average) has 7.2 million residential and business telephone customers in Ontario and Quebec. It also has 6.6 million wireless subscribers across Canada, and sells other services, including Internet access and satellite TV. BCE also owns 44% of Bell Aliant, which has 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. Bell Aliant transferred most of its wireless business to BCE as part of the deal that created the trust in 2006....

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $27 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 127.2 million; Market cap: $3.4 billion; Price-to-sales ratio: 2.2; SI Rating: Above Average) will cut 5% of its workforce as part of a plan to lower its costs by $60 million a year. The fund plans to invest these savings in improving the speed and availability of its Internet service. These upgrades should help it hang on to its current customers and fend off strong competition from cable companies. Meanwhile, Bell Aliant earned $93.5 million, or $0.58 a unit, in the three months ended June 30, 2009. That’s a 10.0% higher than the $85 million, or $0.53 a unit, it earned a year earlier. Revenue fell 2.9%, to $789.7 million from $813.1 million. The fund continues to pay a regular monthly distribution of $0.2417 a unit. That gives it an 10.7% annual yield. Bell Aliant is a buy.

CANADIAN PACIFIC RAILWAY LTD. $53 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168.1 million; Market cap: $8.9 billion; Price-to-sales ratio: 1.4; SI Rating: Above Average)...

LINAMAR CORP. $12 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $776.4 million; Price-to-sales ratio: 0.3; SI Rating: Extra Risk) lost $48.4 million, or $0.75 a share, in the three months ended June 30, 2009. The loss included a $46.3-million writedown of machinery and equipment that Linamar used to make parts for General Motors and Chrysler. Accounting rules forced Linamar to write down the book value of these assets after GM and Chrysler declared bankruptcy in the second quarter. The company also paid $5.4-million in severance payments because weak car sales prompted it to cut its workforce by 12% earlier this year. Without these items, Linamar would have lost $10.1 million, or $0.16 a share. A year earlier, it earned $32.0 million, or $0.48 a share. Sales fell 39.6%, to $378 million from $625.4 million. Despite the loss, Linamar won $250 million in new contracts during the quarter. That’s because the recession has forced some of its smaller competitors to shut down entirely. The company also won a multi-year contract to supply driveline systems to an undisclosed European carmaker. This deal should add $200 million to Linamar’s annual revenue by 2014....

TECK RESOURCES LTD. $28 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 588.5 million; Market cap: $16.5 billion; Price-to-sales ratio: 1.6; SI Rating: Extra Risk) now gets about half of its revenue from metallurgical coal, which is used for making steel. That’s because Teck bought Fording Canadian Coal Trust for $13.6 billion last October. Fording owns six open-pit coal mines in B.C. and Alberta. At current production rates, these mines have an average reserve life of 23 years. Teck also mines copper, zinc and gold.

Credit crisis came at a bad time

Teck used $9.8 billion U.S. in short-term loans to pay for Fording. It planned to convert these into more manageable long-term loans, but the credit crisis lowered demand for new corporate bonds. Then the recession drove down commodity prices. This hurt Teck’s ability to repay the new debt....

BROADRIDGE FINANCIAL SOLUTIONS INC. $20 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 139.3 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.3; WSSF Rating: Extra Risk) provides communication, processing and other back-office services to the investment industry. By outsourcing these activities to Broadridge, its clients can focus on their main businesses. Its clients include 250 banks, 500 mutual-fund families and over 5,000 publicly listed companies. The stock began trading on April 2, 2007, after former parent Automatic Data Processing Inc. (Nasdaq symbol ADP) distributed Broadridge shares to its own shareholders as a special dividend. Since it became a public company, Broadridge’s annual revenue has hovered around $2.15 billion. Earnings fell from $1.42 a share (or a total of $197.1 million) in 2007 to $1.36 a share (or $192.2 million) in 2008. Broadridge’s fiscal year ends on June 30. In 2009, its earnings rose to $1.58 a share (or $223.3 million). If you disregard unusual items, including a gain on the early retirement of debt and a tax credit that lowered its effective income-tax rate, Broadridge’s earnings per share rose 6.3%, to $1.51 from $1.42. The improved earnings came despite difficult conditions in the financial sector....

HARTE-HANKS INC. $14 (New York symbol HHS; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 63.6 million; Market cap: $890.4 million; Price-to-sales ratio: 0.9; WSSF Rating: Average) gets roughly two-thirds of its revenue by selling direct-mail and other marketing services to clients in a wide variety of industries. These help them attract new customers, and sell more goods and services to existing ones. The remaining third of its revenue comes from publishing free “shopper” newspapers in Florida and California. These papers rely solely on advertising. Both of these are cyclical businesses, and they have suffered during the recession as advertisers look to conserve cash. In response, Harte-Hanks has consolidated printing plants and closed call centres. These moves helped cut Harte-Hanks’s operating expenses by $49.3 million in the three months ended June 30, 2009. Despite the lower costs, overall earnings in the quarter still fell 28.3%, to $13.1 million, or $0.20 a share, from $18.2 million, or $0.29 a share, a year earlier. Revenue fell 21.5%, to $215.7 million from $274.8 million....

DIEBOLD INC. $30 (New York symbol DBD; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 66.3 million; Market cap: $2 billion; Price-to-sales ratio: 0.6; WSSF Rating: Average) is one of the world’s leading makers of automated-teller machines (ATMs). The company also makes safes, vaults, building-security systems and electronic-voting machines. Banks have been spending less on new ATMs because of the financial crisis. As well, the recession has prompted many retailers to close stores. This has hurt demand for Diebold’s building-security products and services. The company has aggressively cut its costs in response, including moving most of its manufacturing to China and Hungary. It also sold its manufacturing operations in Argentina. In the three months ended June 30, 2009, Diebold earned $30.4 million, or $0.46 a share. That’s up 11.8% from $27.2 million, or $0.41 a share, a year earlier. If you exclude unusual costs, most of which were in the year-earlier period, earnings per share would have fallen 29.0%, to $0.49 from $0.69. Sales fell 8.9%, to $700.5 million from $768.7 million....

CINTAS CORP. $28 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.8 million; Market cap: $4.3 billion; Price-to-sales ratio: 1.1; WSSF Rating: Average) provides a variety of products and services to over 800,000 businesses, mainly in North America. These include selling and renting uniforms, entrance mats, fire extinguishers, first-aid kits and cleaning products. The company also shreds documents. Many of its clients cancelled these services to cut costs during the recession. In response, Cintas closed some of its uniform-making plants in 2008. This has already saved it $60 million. Moreover, the company plans to lay off 1,200 of its 31,000 employees over the next year. It has set aside $59.1 million for severance and other costs. In the fiscal year ended May 31, 2009, Cintas earned $226.4 million, or $1.48 a share. If you exclude restructuring costs, it would have earned $1.83 a share. In the prior year, the company earned $335.4 million, or $2.15 a share. Revenue fell 4.1%, to $3.8 billion from $3.9 billion, mostly due to lower demand for uniforms and cleaning services. Cintas sells scrap paper from its shredding operations, and lower paper prices have also hurt its revenue....