The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

PDA 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 PDA 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 0.92x and 0.36x respectively.

Utilizing this range we can see that PDA’s current Price to Sales per share ratio of 0.63x is somewhat below its historical weighted average by 2%. 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.

PDA Cash Earnings

As the old saying goes, "Cash is King!" However, we prefer to capture a few other items within our analysis to identify "cash earnings". Nevertheless, an analysis of Cash Earnings is absolutely pivotal to assessing a company's value, and currently PDA is 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 PDA 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 11.17 and a 4.63 low over the same period.

Now that PDA’s current price is $32.03 and its Price to Cash Earnings ratio is 4.45, we are very positive on its outlook from the cash earnings perspective. In fact, PDA is now trading a full 44% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why PDA 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.

PDA Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company. PDA does have a track record of dividend payouts to stockholders, but management has seen fit to discontinue this dividend strategy. They currently do not pay a dividend, which represents to us that management had few other options to strengthen the company's financial position.