price to sales ratio

HONDA MOTOR CO. ADRs $27 (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.8 billion; Market cap: $48.6 billion; Price-to-sales ratio: 0.5; WSSF Rating: Above average) is Japan’s second-largest carmaker. It’s also the world’s largest motorcycle producer. Honda sold 3.5 million vehicles in fiscal 2009. That’s down 10.4% from 3.9 million in the prior year. However, motorcycle volumes rose 8.5%, to 10.1 million from 9.3 million. Revenue fell 14.9%, to $101.9 billion from $119.8 billion a year earlier. Earnings plunged 76.7%, to $1.4 billion, or $0.77 per ADR, from $6 billion, or $3.30 per ADR. (Each American Depositary Receipt represents one Honda common share.) The earnings drop was mostly because of lower sales, higher raw-material costs and the negative impact of the high Japanese yen. North America accounts for 45% of its sales, so it’s more vulnerable to currency movements than Toyota. Honda’s small, fuel-efficient cars should continue to appeal to cost-conscious consumers during the recession. Like Toyota, it also aims to lower its costs by building more models that use the same parts. This year’s earnings will probably drop to $0.37 per ADR, but should rebound to $1.15 in fiscal 2011. The stock trades at 23.5 times the 2011 estimate. The $0.46 dividend yields 1.7%....

CANON INC. ADRs $34 (New York symbol CAJ; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.2 billion; Market cap: $40.8 billion; Price-to-sales ratio: 1.0; WSSF Rating: Above Average) earned $181.1 million, or $0.15 per ADR, in the three months ended March 31, 2009. (Each American Depositary Receipt represents one Canon common share). That’s down 83% from $1.1 billion, or $0.85 per ADR, a year earlier. Revenue fell 30.4%, to $7 billion from $10.1 billion. The recession has hurt business demand for new printers and copiers. Consumers are also buying fewer digital cameras. As well, the company gets 75% of its revenue from outside of Japan, so the higher yen weighed on its results. To conserve cash, Canon will cut this year’s research spending by 10%, to around $3.4 billion (Last year, Canon spent 9.1% of its revenue on research.) Despite the cut, Canon should continue to develop new printers and cameras. These will help the company maintain its high market share and fuel its sales when the economy recovers. Canon is a buy....

THE STANLEY WORKS $34 (New York symbol SWK; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 79.1 million; Market cap: $2.7 billion; Price-to-sales ratio: 0.6; WSSF Rating: Average) makes hand and power tools for consumer and industrial users. Its top-selling brands include Stanley, FatMax and Powerlock. It mainly sells its tools through home-improvement retailers like Home Depot.

Security products cut Stanley’s risk

Stanley has spent $2.8 billion on acquisitions since 2002. We generally take a skeptical view of companies that fuel growth this way. But most of these purchases have cut Stanley’s reliance on tools. As a result, building-security operations, including automatic doors, gates and monitoring services, now supply 35% of Stanley’s sales and 45% of its earnings....

AGILENT TECHNOLOGIES INC. $19 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 343.3 million; Market cap: $6.5 billion; Price-to-sales ratio: 1.3; WSSF Rating: Average) gets 60% of its revenue from selling testing equipment, mainly to makers of cyclical consumer electronics, such as cellphones. The company is now working on ways to broaden its sources of revenue. For example, Agilent has teamed up with the University of California at Los Angeles School of Public Health and the Los Alamos National Laboratory to develop testing equipment that will identify dangerous viruses, including H1N1 influenza, also known as swine flu. Agilent’s automated system analyzes a virus’s genetic components “hundreds of times” faster than current methods. This will help public-health officials control future outbreaks....

KRAFT FOODS INC. $26 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $39 billion; Price-to-sales ratio: 0.9; WSSF Rating: Above Average) is the world’s second-largest food company after Nestle. Top brands include Kraft (cheese), Maxwell House (coffee), Nabisco (biscuits and cookies) and Oscar Meyer (meats). Kraft faces strong competition from private-label foods, particularly in some of its main product lines, such as cheese, coffee and processed meats. But it has been helped by lower costs for a number of its raw materials, especially dairy products. In the three months ended March 31, 2009, Kraft’s revenue fell 6.5%, to $9.4 billion from $10 billion a year earlier. However, if you account for last year’s sale of its Post cereals business and the negative impact of currency rates on overseas sales, Kraft’s revenue rose 2.3%. Overall earnings rose 21%, to $662 million from $547 million. Earnings per share rose 28.6%, to $0.45 from $0.35, on fewer outstanding shares....

DEL MONTE FOODS CO. $9.02 (New York symbol DLM; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 197.7 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.5; WSSF Rating: Average) makes a wide variety of canned fruits and vegetables, as well as sauces and soups. Del Monte also makes pet food under the 9Lives, Milk-Bone and Meow Mix brands. In the fiscal year ended May 3, 2009, Del Monte’s earnings rose 25.5%, to $147.7 million, or $0.74 a share. In the prior year, it earned $117.7 million, or $0.58 a share. If you exclude an $0.08-a-share charge related to job cuts in the prior year, per-share earnings would have risen 12.1%. Sales rose 14.1%, to $3.6 billion from $3.2 billion. Del Monte is raising the prices of its main brands, and spending more on marketing. It hopes these moves will make these products more profitable....

CAMPBELL SOUP CO. $29 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 350.3 million; Market cap: $10.2 billion; Price-to-sales ratio: 1.3; WSSF Rating: Above Average) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices. Like Heinz Campbell plans to spur growth by expanding overseas. International markets now supply 30% of its revenue. It is particularly interested in Russia and China, where soup is popular. As a result of its growing international operations, unfavourable currency rates held back Campbell’s earnings by $0.04 a share in its third fiscal quarter, which ended May 3, 2009. The company’s sales fell 10.3%, to $1.7 billion from $1.9 billion. Currency rates accounted for about half of the decline....

H.J. HEINZ CO. $35 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 315 million; Market cap: $11 billion; Price-to-sales ratio: 1.1; WSSF Rating: Above Average) is a leading maker of condiments. Its flagship product, Heinz Ketchup, makes up about 60% of all ketchup sold in the U.S. Heinz also makes frozen potatoes (under the Ore-Ida brand), pasta sauces (Classico) and diet foods (Weight Watchers). Heinz has expanded its overseas operations over the last few years. These now account for about 60% of its sales. And the company plans to keep adding new markets: it’s particularly interested in China, India, Russia and Poland. However, Heinz’s international growth adds currency risk. In its latest fiscal year, which ended April 29, 2009, sales rose just 0.8%, to a record $10.15 billion from $10.07 billion in the prior year. But excluding the negative impact of the higher U.S. dollar, sales would have risen 7.4%. The company raised its selling prices, which helped offset a 1.5% drop in volumes. Earnings rose 9.3%, to $923.1 million from $844.9 million. Earnings per share rose 10.3%, to $2.90 from $2.63, on fewer outstanding shares....

GENERAL MILLS INC. $55 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 329 million; Market cap: $18.1 billion; Price-to-sales ratio: 1.3; WSSF Rating: Above Average) is the second-largest maker of breakfast cereals in the United States after Kellogg. Its main brands include Cheerios, Wheaties and Total. The company also makes Betty Crocker baking mixes, Green Giant canned and frozen vegetables and Yoplait yogurt. General Mills will probably report earnings of $3.92 a share in its latest fiscal year, which ended May 31, 2009. That’s slightly higher than its previous forecast of $3.87 to $3.89. These figures exclude unusual items, mainly gains and losses on hedging contracts that General Mills uses to lock in prices for wheat, corn and other raw materials. The company raised its selling prices last year in order to offset higher prices for these raw materials. Since then, these costs have stabilized; this was the main reason behind the higher earnings forecast. It also expects a lower income-tax rate in the fourth quarter of fiscal 2009....

CONAGRA FOODS INC. $20 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 447.2 million; Market cap: $8.9 billion; Price-to-sales ratio: 0.7; WSSF Rating: Above Average) makes a number of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn. In its third fiscal quarter, which ended February 22, 2009, ConAgra’s earnings per share rose 17.6%, to $0.40 from $0.34 a year earlier. These figures exclude several non-recurring items, but they include a $0.05-a-share gain on hedging contracts, which ConAgra uses to lock in costs for wheat, corn and other ingredients. As well, ConAgra paid $0.03 a share in legal costs related to a 2007 peanut-butter recall that was caused by a salmonella outbreak. Sales rose 6.1%, to $3.1 billion from $3 billion. ConAgra raised its selling prices because of higher raw-material costs. This offset lower sales volumes....