The Razor's Edge

2-Year Price History

Ockham's Rating

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PCZ 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 10 years. For, PCZ the high and low end of the Price to Sales per share ratios are 1.36x and 0.77x respectively.

Notice that PCZ's current Price to Sales per share ratio is 0.47x, 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 $25.05, PCZ is 57% below where we would expect to see it. This will beneficially factor into our final analysis of PCZ as it is not often that this stock sinks to these levels.

PCZ 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. PCZ is significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from PCZ. For example, PCZ's Cash Earnings ratio per share has fluctuated between 3.97 and 6.85 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where PCZ is with respect to prior business periods.

So with PCZ's current price (latest close of $25.05) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, PCZ is 66% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with PCZ.

PCZ Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.

When reviewing dividend yields for PCZ, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. PCZ’s estimated annual dividend is $0.75 resulting in a current dividend yield of 2.99%. The highest dividend yield from PCZ over recent history was 4.74% while the lowest dividend yield was 0.56%. PCZ has shown confidence by hiking up the dividend yield to 12.83% above the historical median.