The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

TAP Revenue

As a value investing shop, we are interested in seeing how TAP'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 1.06x and the low end of the range at 0.69x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for TAP of 1.01x is well above its historical average. This means that TAP looks relatively expensive compared to its historical Price to Sales average, and thus it is more difficult to believe that there is significant price appreciation potential. In order for the stock to become more attractive, we would like to see a decline in the Price to Sales ratio of 15% just to return TAP to its historical average.

TAP 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. TAP is above 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 TAP. For example, TAP's Cash Earnings ratio per share has fluctuated between 5.58 and 8.52 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where TAP is with respect to prior business periods.

So when we look at TAP, what does this slightly higher than historical level of Price to Cash Earnings mean? From the Ockham perspective, it basically represents that the market has a higher stock price attributed to this level of Cash Earnings than compared to normal. So while we view this as a negative from a valuation perspective, it certainly doesn't mean that TAP couldn't rapidly improve in its value from other factors or a decline in stock price. The current Price to Cash Earnings level of 7.34 is 4% above the historical norm as calculated at Ockham. So a decline in stock price, or more hopefully, an increase in TAP's Cash Earnings levels would improve our outlook for the stock.

TAP 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 TAP, 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. TAP’s estimated annual dividend is $0.80 resulting in a current dividend yield of 1.80%. The highest dividend yield from TAP over recent history was 2.29% while the lowest dividend yield was 0.87%. TAP has shown confidence by hiking up the dividend yield to 13.92% above the historical median.