NYSE:CCU
$38.30
(3/12 4:00PM)
-1.1%
| Open | $38.9 |
Mkt Cap | $2.4 Billion |
| High | $38.9 |
52Wk High | $42.89 |
| Low | $38.17 |
52Wk Low | $27.75 |
| Volume | 14,100 |
Avg Vol 10D | 38,600 |
Ockham's Rating/Recommendation Summary
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CCU Revenue
As a value investing shop, we are interested in seeing how CCU'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 2.40x and the low end of the range at 1.55x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for CCU of 1.92x is somewhat below its historical weighted average by 3%. Given this level of sales per share, we suggest a neutral share price forecast. To the extent there is a further drop in the Price to Sales ratio from current levels, which would occur through some combination of increased sales per share or a decline in share price, we would only become more positive about the Price to Sales ratio outlook.
CCU Cash Earnings
Looking at CCU specifically in their Cash Earnings capabilities, Ockham views CCU as significantly above 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 CCU 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 13.11 and a 8.50 low over the same period.
Just recall that when a stock's price, as in the cases of CCU, is significantly elevated to the level of Cash Earnings being generated, the market has already priced in much of that value. For example, the historical average for CCU's Price to Cash Earnings ratio is 15% below the current ratio of 12.44. That is not an insignificant amount, and diminishes our overall outlook on CCU. However, you need to review several areas of a company's potential, and as management would point out, one metric is not the end-all-be-all of any analysis.
CCU 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 CCU, 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. CCU’s estimated annual dividend is $0.79 resulting in a current dividend yield of 2.06%. The highest dividend yield from CCU over recent history was 6.76% while the lowest dividend yield was 0.00%. With that range in mind, CCU’s current dividend yield is a full 39.05% below its median dividend yield historically. This is a negative from our perspective.
