The Razor's Edge

2-Year Price History

PCZ Revenue

As a value investing shop, we are interested in seeing how PCZ's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 1.39x and the low end of the range at 0.88x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for PCZ of 0.85x is well below its normal historic Price to Sales levels. At a price of $44.72, PCZ is 26% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

PCZ Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of PCZ, Ockham views their current Cash Earnings as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for PCZ, the current level of Cash Earnings compared to its historical levels helps identify where PCZ 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 7.37 and a historical low Cash Earnings per share ratio of 4.65, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for PCZ? From the Ockham perspective, we are looking specifically at PCZ to see if the market is recognizing the huge disparity between PCZ's past stock price to Cash Earnings ratio to today's levels. At a difference of 44% 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 PCZ. 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.

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 $0.52 resulting in a current dividend yield of 1.16%. The highest dividend yield from PCZ over recent history was 2.16% while the lowest dividend yield was 0.56%. The current dividend yield is below the historical median, which is slightly off-putting. We are a bit adverse to PCZ from this valuation metric.