The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

ARD 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 ARD through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 8 years are 11.79x and 5.25x respectively.

Utilizing this range we can see that ARD’s current Price to Sales per share ratio of 3.66x is significantly below its average levels historically. In fact, with a current price of $28.73, ARD is a full 58% 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 ARD.

ARD Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. ARD is 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 7 years of cash earnings levels for ARD 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 24.27 and a 10.54 low over the same period.

Now that ARD’s current price is $28.73 and its Price to Cash Earnings ratio is 8.45, we are very positive on its outlook from the cash earnings perspective. In fact, ARD is now trading a full 52% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why ARD 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.

ARD 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 ARD to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. We regard ARD as neutral in terms of dividends because they have no history of paying a dividend and continue to reinvest that money for growth purposes.