The Razor's Edge

2-Year Price History

BUD Revenue

As a value investing shop, we are interested in seeing how BUD'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 2.81x and the low end of the range at 2.26x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for BUD of 2.79x is slightly above its historical average. This level of Price to Sales gives us a fairly neutral position on the shares. We would like to see a drop in the Price to Sales ratio of 10% given current sales figures before we would become more positive on a Price to Sales basis. Such a drop would put Price to Sales per share in line with BUD's weighted historical average.

BUD 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 BUD, Ockham views their current Cash Earnings as 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 BUD. For example, BUD's Cash Earnings ratio per share has fluctuated between 11.54 and 14.34 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where BUD is with respect to prior business periods.

So when we look at BUD, 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 BUD couldn't rapidly improve in its value from other factors or a decline in stock price. The current Price to Cash Earnings level of 14.83 is 14% above the historical norm as calculated at Ockham. So a decline in stock price, or more hopefully, an increase in BUD's Cash Earnings levels would improve our outlook for the stock.

BUD 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 BUD, 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. BUD’s estimated annual dividend is $1.48 resulting in a current dividend yield of 2.18%. The highest dividend yield from BUD over recent history was 3.25% while the lowest dividend yield was 1.26%. The current dividend yield is below the historical median, which is slightly off-putting. We are a bit adverse to BUD from this valuation metric.