The Razor's Edge

2-Year Price History

A Word Of Caution

While, we stand by our ratings methodology for long term value investors, sometimes smaller companies will be more volatile in terms of revenue, cash earnings, and other fundamental factors. Kimball International, Incorporated (KBALB) is such a stock. Because many micro-caps are lightly traded their stock price can fluctuate because of a single large trade. Also, there is less analyst coverage of such micro-caps and therefore less information from which to base our ratings.

Therefore, (and as always), check additional sources and available information regarding KBALB before making an investment decision.

Ockham's Rating

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KBALB 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 KBALB through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 0.59x and 0.33x respectively.

Utilizing this range we can see that KBALB’s current Price to Sales per share ratio of 0.19x is significantly below its average levels historically. In fact, with a current price of $6.69, KBALB is a full 60% 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 KBALB.

KBALB Cash Earnings

Looking at KBALB specifically in their Cash Earnings capabilities, Ockham views KBALB 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 10 years of cash earnings levels for KBALB 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 13.08 and a 6.91 low over the same period.

Now that KBALB’s current price is $6.69 and its Price to Cash Earnings ratio is 4.68, we are very positive on its outlook from the cash earnings perspective. In fact, KBALB is now trading a full 54% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why KBALB 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.

KBALB 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 KBALB to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for KBALB is $0.64 producing a current dividend yield of 9.57%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from KBALB against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from KBALB over previous years was 15.80% while the lowest dividend yield was 2.46%. Management at KBALB has encouraged us with a current dividend yield of 4.82% above the historical median.