The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

UPL Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at UPL through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 9 years are 15.76x and 7.96x respectively.

Utilizing this range we can see that UPL’s current Price to Sales per share ratio of 3.38x is significantly below its average levels historically. In fact, with a current price of $36.92, UPL is a full 72% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for UPL.

UPL Cash Earnings

Looking at UPL specifically in their Cash Earnings capabilities, Ockham views UPL as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 9 years of cash earnings levels for UPL to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 28.17 and a 14.10 low over the same period.

Now that UPL’s current price is $36.92 and its Price to Cash Earnings ratio is 7.17, we are very positive on its outlook from the cash earnings perspective. In fact, UPL is now trading a full 67% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why UPL has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

UPL Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for UPL to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. As far as our investing methodology goes, it is not necessary to pay a dividend in order to get a favorable rating, so as for right now UPL gets a neutral rating for the dividend portion of the model. The company is not currently paying a dividend nor have they in the fairly recent past.