The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

BBG Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 5 years. For, BBG the high and low end of the Price to Sales per share ratios are 4.82x and 2.53x respectively.

Notice that BBG's current Price to Sales per share ratio is 1.86x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $23.91, BBG is 50% below where we would expect to see it. This will beneficially factor into our final analysis of BBG as it is not often that this stock sinks to these levels.

BBG Cash Earnings

Looking at BBG specifically in their Cash Earnings capabilities, Ockham views BBG as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for BBG, the current level of Cash Earnings compared to its historical levels helps identify where BBG is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 9.67 and a historical low Cash Earnings per share ratio of 5.11, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for BBG? From the Ockham perspective, we are looking specifically at BBG to see if the market is recognizing the huge disparity between BBG's past stock price to Cash Earnings ratio to today's levels. At a difference of 52% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at BBG. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

BBG Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure on a company's inherent expectations. 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 BBG 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.