STT Stock Report

2-Year Price History

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Ockham's Rating

STT 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 STT 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 2.82x and 1.69x respectively.

Utilizing this range we can see that STT’s current Price to Sales per share ratio of 1.65x is significantly below its average levels historically. In fact, with a current price of $46.23, STT is a full 27% 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 STT.

STT 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 STT, Ockham views their current Cash Earnings as significantly below 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 STT. For example, STT's Cash Earnings ratio per share has fluctuated between 14.12 and 23.07 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where STT is with respect to prior business periods.

So with STT's current price (latest close of $46.23) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, STT is 38% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with STT.

STT 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 STT, 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. STT’s estimated annual dividend is $0.04 resulting in a current dividend yield of 0.09%. The highest dividend yield from STT over recent history was 3.36% while the lowest dividend yield was 0.05%. With that range in mind, STT’s current dividend yield is a full 94.72% below its median dividend yield historically. This is a negative from our perspective.