price to sales ratio

TOYOTA MOTOR CO. ADRs $83 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.6 billion; Market cap: $132.8 billion; Price-to-sales ratio: 0.6; WSSF Rating: Above Average) recently overtook General Motors as the world’s largest carmaker. That was partly due to its success with gasoline-electric hybrid cars. Toyota started selling its Prius mid-sized hybrid car in 1997, and now dominates this market. Besides the Prius, the company has launched hybrid versions of its larger cars and trucks. Hybrids account for less than 10% of Toyota’s sales, but they generate much higher profit margins than its gasoline-powered cars. The company owns patents on over 2,000 hybrid-engine parts. That makes it difficult for other carmakers to develop their own hybrids. As a result, many have licensed the technology from Toyota. This generates royalty income for the company. For example, Japanese carmaker Subaru (16% owned by Toyota), uses Toyota’s hybrid technology, and the company may be close to a deal with Mazda, as well. However, Nissan plans to end its deal with Toyota and develop its own systems....

Most power plants are located near big cities to keep transmission costs down. However, wind farms tend to be in remote areas with steady winds. Growth in wind power will force utilities to expand their electrical-power grids. That should lead to higher sales for transmission-equipment suppliers, such as General Electric and ABB. GENERAL ELECTRIC CO. $12 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $127.2 billion; Price-to-sales ratio: 0.8; WSSF Rating: Above Average) is one of the world’s largest makers of industrial equipment. Products include aircraft engines, medical-imaging scanners and locomotives. GE is also a major supplier of electrical infrastructure equipment, such as turbines, voltage regulators and fuses. These accounted for 21% of its 2008 revenue, and 23% of its profit. Moreover, as a leading maker of windmills and nuclear-power plants, GE is in a good position to profit from new environmental rules that limit greenhouse-gas emissions....

GENERAL ELECTRIC CO. $12 (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.6 billion; Market cap: $127.2 billion; Price-to-sales ratio: 0.8; WSSF Rating: Above Average) is one of the world’s largest makers of industrial equipment. Products include aircraft engines, medical-imaging scanners and locomotives. GE is also a major supplier of electrical infrastructure equipment, such as turbines, voltage regulators and fuses. These accounted for 21% of its 2008 revenue, and 23% of its profit. Moreover, as a leading maker of windmills and nuclear-power plants, GE is in a good position to profit from new environmental rules that limit greenhouse-gas emissions. In the three months ended June 30, 2009, GE’s revenue fell 16.6%, to $39.1 billion from $46.8 billion a year earlier. Revenue fell 29% at GE Capital, the company’s struggling finance business, but just 7% at its industrial operations. Earnings fell 48.4%, to $2.9 billion, or $0.26 a share, from $5.6 billion, or $0.54 a share....

ABB LTD. ADRs $17 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $39.1 billion; Price-to-sales ratio: 1.2; WSSF Rating: Above Average) is a Swiss-based maker of transformers, transmission switches and other electricity-infrastructure equipment. In the three months ended June 30, 2009, ABB earned $728 million, or $0.29 per ADR. (Each American Depositary Receipt represents one ABB common share.) This figure included $120 million in restructuring costs. ABB aims to save a total of $2 billion a year by the end of 2010 by cutting an unspecified number of jobs, closing plants and buying more raw materials from low-cost countries. In the year-earlier quarter, ABB earned $1.1 billion, or $0.43 per ADR. Revenue fell 12.3%, to $7.9 billion from $9 billion. ABB holds cash of $8.1 billion, or roughly $3.55 per ADR. Its $2.1-billion long-term debt is just 5% of its market cap. That gives it plenty of flexibility to buy other related companies. In light of the recession, ABB could find some bargains. It’s particularly interested in China, where spreading industrialization has lifted demand for its products....

AMERICAN EXPRESS CO. $28 (New York symbol AXP; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.2 billion; Market cap: $33.6 billion; Price-to-sales ratio: 1.2; WSSF Rating: Average) reports that 4.4% of its U.S. cardholders were behind in their payments in the second quarter of 2009....

SUPERVALU INC. $14 (New York symbol SVU, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 230 million; Market cap: $3.2 billion; Price-to-sales ratio: 0.1; WSSF Rating: Average) is the second-largest supermarket operator in the U.S. behind Kroger. Its 2,500 stores account for roughly 78% of its revenue. The remaining 22% comes from its food wholesale operations, which supply its own stores as well as more than 2,500 other grocery retailers. In its first fiscal quarter, which ended June 20, 2009, Supervalu earned $113 million, or $0.53 a share. That’s down 30.3% from $162 million, or $0.76 a share, a year earlier. Sales fell 4.7%, to $12.7 billion from $13.3 billion. Supervalu has been forced to lower its selling prices because of intense competition with large discount retailers like Wal-Mart. This has hurt its sales and profit margins. Separately, Supervalu will sell 36 of its stores in Utah. The company will realize a $150-million gain from the deal when it closes later this year. The company will probably earn $2.10 a share this year, and the stock trades at 6.7 times that estimate. The $0.70 dividend yields 5.0%....

The recession has forced many consumers to cut their restaurant visits. When they do go out, many are switching to less-expensive establishments and skipping extras, like appetizers and dessert. Consumers are also waiting for sales instead of buying groceries at regular prices. These factors are bad news for Sysco and Supervalu, two of the largest food sellers in the U.S. Both are cutting costs, which will help them stay profitable for now. However, both need a sustained economic recovery to start growing again. SYSCO CORP. $23 (New York symbol SYY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 589.9 million; Market cap: $13.6 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) sells food and kitchen supplies to over 400,000 restaurants, schools, hotels and hospitals in the U.S. and Canada. The company has about 16% of the North American food-service market. In its third fiscal quarter, which ended March 28, 2009, Sysco’s sales fell 4.5%, to $8.7 billion from $9.1 billion a year earlier. The drop came despite a 3.3% increase in food costs, which Sysco passed on to its customers. Earnings fell 6.1%, to $226.2 million from $240.9 million. Earnings per share fell 5%, to $0.38 from $0.40, on fewer shares outstanding....

SYSCO CORP. $23 (New York symbol SYY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 589.9 million; Market cap: $13.6 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) sells food and kitchen supplies to over 400,000 restaurants, schools, hotels and hospitals in the U.S. and Canada. The company has about 16% of the North American food-service market. In its third fiscal quarter, which ended March 28, 2009, Sysco’s sales fell 4.5%, to $8.7 billion from $9.1 billion a year earlier. The drop came despite a 3.3% increase in food costs, which Sysco passed on to its customers. Earnings fell 6.1%, to $226.2 million from $240.9 million. Earnings per share fell 5%, to $0.38 from $0.40, on fewer shares outstanding. Some of Sysco’s customers are falling behind on their bills because of the recession. In the first nine months of fiscal 2009, Sysco wrote off $61.6 million of loans to its customers, up from $25.9 million a year earlier. In response to falling demand and the loan writeoffs, Sysco has cut its workforce by 6% in the past year....

GANNETT CO. INC. $6.26 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 232.4 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.2: WSSF Rating: Average) will start selling an online edition of USA Today, its flagship newspaper, in August. The company already sells an electronic version of USA Today through Amazon.com’s Kindle e-book reader service. Online newspapers face strong competition from free Internet news sources. But USA Today aims to use exclusive content to attract online subscribers. As well, unlike the print version, the online edition will publish a weekend edition. Moreover, online publishing is cheaper than printing and delivering newspapers, so Gannett needs fewer subscribers to earn a profit on this project. Gannett is a buy.

WELLS FARGO & CO. $24 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 4.7 billion; Market cap: $112.8 billion; Price-to-sales ratio: 1.8; WSSF Rating: Average) earned a record $3.2 billion in the second quarter of 2009. That’s up 80.9% from $1.8 billion a year earlier. Last January’s purchase of rival banking firm Wachovia Corp. was the main reason for the gain. Wells Fargo issued shares to help pay for Wachovia. It also sold shares to the public in May so it could better absorb higher loan losses during the recession. These moves increased the number of shares outstanding by 41%, so per-share earnings rose just 7.5% in the quarter, to $0.57 from $0.53. Revenue jumped 96.4%, to $22.5 billion from $11.5 billion. Wachovia accounted for 39% of Wells Fargo’s second-quarter revenue. The recession continues to hurt the quality of the company’s loan portfolio. It raised its loan-loss provisions by 68.9% in the latest quarter, to $5.1 billion from $3 billion a year earlier. However, Wells Fargo’s management feels the Wachovia merger will let it cut its annual expenses by $5 billion. This should help offset the higher loan losses. Wells Fargo is a buy....