price to sales ratio

CANADIAN IMPERIAL BANK OF COMMERCE $57 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 381.5 million; Market cap: $21.7 billion; Price-to-sales ratio: 1.5; SI Rating: Above Average) became the target of a $600 million class-action lawsuit in June 2007. Former and current employees accused the bank of failing to pay overtime. (CIBC lost $51 million, or $0.24 a share, in the three months ended April 30, 2009, mainly because of $743 million in writedowns.) Last month, a judge ruled that the suit did not meet the criteria for a class-action trial, though individual claims can still go ahead. Despite the ruling, the case’s high profile will probably force CIBC to change the way it manages employees. That will almost certainly increase its labour costs. However, it’s likely that other banks will also change their overtime rules to avoid similar lawsuits....

TORSTAR CORP. $5.04 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.9 million; Market cap: $397.7 million; Price-to-sales ratio: 0.3; SI Rating: Above Average) publishes The Toronto Star, which is Canada’s largest daily newspaper by circulation. The company also publishes three other daily papers and over 100 weeklies, mainly in southern Ontario. Newspapers and web sites account for about 70% of Torstar’s revenue, and 60% of its earnings. The company’s other main business is wholly owned Harlequin Enterprises Ltd., the world’s leading publisher of romance-fiction books. Harlequin also publishes non-fiction titles, such as self-help and diet books. Harlequin sells 95% of its books outside of Canada, which helps reduce Torstar’s reliance on Ontario, where the recession has had a significant impact. It also helps Torstar benefit from a lower Canadian dollar. Torstar continues to suffer from lower advertising revenue at its newspapers, with real-estate and employment ads particularly hard hit. However, Torstar’s management feels that demand has stabilized following a sharp drop in the first two months of 2009. As the largest newspaper in its market, The Toronto Star is in a good position to attract advertisers as the economy recovers....

THOMSON REUTERS CORP. $32 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 828.6 million; Market cap: $26.5 billion; Price-to-sales ratio: 2.0; SI Rating: Above Average) divides its operations into two divisions: Markets accounts for 60% of the company’s revenue and sells financial-information products to banks and other financial institutions. Professional (40% of revenue) sells specialized information to professionals in the legal, accounting, scientific and health-care fields. Thomson Reuters gets about 60% of its revenue from the Americas, followed by Europe (30%) and Asia (10%). Thomson Reuters took its present form when the Ontario-based Thomson Corp. bought the U.K.-based Reuters news agency in April 2008 for $17 billion in cash and shares (all amounts except share price and market cap in U.S. dollars). In the three months ended March 31, 2009, Thomson Reuters’ revenue soared 70.3%, to $3.1 billion from $1.8 billion. However, if you assume that Thomson bought Reuters at the start of 2007, sales would have declined 3.3%. The drop was due to the negative impact of the higher U.S. dollar, which hurts the value of the company’s overseas sales. If you disregard exchange rates, revenue would have risen 3%....

ENCANA CORP. $52 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.6 million; Market cap: $39 billion; Price-to-sales ratio: 1.1; SI Rating: Average) is a leading North American producer of natural gas and oil. Natural gas accounts for 80% of its production. In July 2008, gas prices shot up to around $12 per thousand cubic feet (all amounts except share price and market cap in U.S. dollars), but have fallen to around $3.38 today. The drop was partly caused by cooler spring weather. This has cut air-conditioner use, so electric utilities are burning less gas. Gas companies have also increased supplies by importing liquefied natural gas and bringing new projects into production. Like many resource companies, EnCana uses hedging contracts to lock in its selling price for natural gas. These help shield it from changing prices. The company has hedged two-thirds of its natural-gas production at an average price of $9.13 through October....

The recession continues to drive down railway volumes and stock prices. However, both CN and CP have been cutting costs, which will help them increase their profits once the economy starts growing again. As well, both recently made acquisitions in the U.S. that should fuel their growth. CANADIAN NATIONAL RAILWAY CO. $45 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 468.4 million; Market cap: $21.1 billion; Price-to-sales ratio: 2.5; SI Rating: Above Average) operates the largest freight-rail network in Canada. It also serves 16 U.S. states. In the three months ended March 31, 2009, CN’s revenue fell 3.5%, to $1.86 billion from $1.93 billion a year earlier. The recession cut freight volumes, and CN lowered its fuel surcharges in response to the drop in oil prices. Earnings rose 0.7%, to $302 million from $300 million. Earnings per share rose 3.2%, to $0.64 from $0.62, on fewer outstanding shares. These figures exclude several one-time items, including a gain on the sale of a Toronto rail line and expenses related to CN’s recent takeover of a Chicago-area railway. Still, the company benefitted from a lower income-tax rate and a weaker Canadian dollar, which increased the contribution of its American operations....

CANADIAN PACIFIC RAILWAY LTD. $40 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168 million; Market cap: $6.7 billion; Price-to-sales ratio: 1.4; SI Rating: Above Average) ships freight over a rail network between Montreal and Vancouver. It also operates in the midwestern and northeastern United States. CP’s first-quarter earnings fell 31.1%, to $62.5 million, or $0.39 a share, from $90.7 million, or $0.59 a share, a year earlier. If you exclude foreign-exchange gains and losses, per-share earnings fell 54.7%, to $0.34 from $0.75. Revenue fell just 6.6%, to $1.07 billion from $1.15 billion. However, that was mostly because CP bought a railway that operates in eight U.S. states last October. Without this, CP’s revenue would have fallen 13%. The company is stepping up its cost cutting in response to weak shipping volumes. This includes laying off 2,400 workers, or 16% of its workforce. CP has also put more trains into storage....

CANADIAN NATIONAL RAILWAY CO. $45 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 468.4 million; Market cap: $21.1 billion; Price-to-sales ratio: 2.5; SI Rating: Above Average) operates the largest freight-rail network in Canada. It also serves 16 U.S. states. In the three months ended March 31, 2009, CN’s revenue fell 3.5%, to $1.86 billion from $1.93 billion a year earlier. The recession cut freight volumes, and CN lowered its fuel surcharges in response to the drop in oil prices. Earnings rose 0.7%, to $302 million from $300 million. Earnings per share rose 3.2%, to $0.64 from $0.62, on fewer outstanding shares. These figures exclude several one-time items, including a gain on the sale of a Toronto rail line and expenses related to CN’s recent takeover of a Chicago-area railway. Still, the company benefitted from a lower income-tax rate and a weaker Canadian dollar, which increased the contribution of its American operations....

TECK RESOURCES LTD. $18 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 486.9 million; Market cap: $8.8 billion; Price-to-sales ratio: 1.2; SI Rating: Extra Risk) will see its coal-shipping costs fall by $70 million this year following a favourable arbitration ruling over CP Rail. The two companies could not agree to a new contract, so Teck opted for arbitration. To put these savings in context, Teck earned $227 million, or $0.47 a share, in the first quarter of 2009. Separately, Teck has reached a new deal with CN Rail that will see CN ship more of Teck’s coal. Being able to use both CP and CN should help Teck improve its efficiency. Teck Resources is a buy.

AGRIUM INC. $43 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 157 million; Market cap: $6.6 billion; Price-to-sales ratio: 0.5; SI Rating: Average) is working on a plan to capture carbon dioxide released from its fertilizer plant near Edmonton. The company wants to ship the reclaimed carbon to oil producers, who would pump it into underground deposits to extract more oil. Selling its excess carbon would give Agrium another source of revenue. This year, the Alberta government will allocate $100 million to three carbon-capture proposals, including Agrium’s project. It did not say how much each would receive. However, it will probably take Agrium several years to perfect this technology. Agrium is a hold.

MDS INC. $6.06 (Toronto symbol MDS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 120.1 million; Market cap: $727.8 million; Price-to-sales ratio: 0.4; SI Rating: Average) has sold one of its two late-stage drug testing businesses. The company is still looking for a buyer for the second one. To put the $50-million sale price in perspective, MDS lost $17 million, or $0.15 a share, in the three months ended April 30, 2009 (all amounts except share price and market cap in U.S. dollars). The loss included a $16-million writedown of buildings and equipment at its drug-testing division. By getting out of late-stage testing, MDS will be able to focus on its more promising early-stage operations. However, the company’s medical-isotope business continues to suffer from the closure of the Chalk River reactor near Ottawa, which will remain out of service until late 2009. MDS gets all of its isotopes from Chalk River, and the shutdown is cutting its gross earnings by $4 million a month. MDS is a hold....