TRC Investment Analysis Report & Stock Research, Tejon Ranch Co.

Ockham's Rating/Recommendation Summary

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TRC 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 TRC 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 30.89x and 18.99x respectively.

Utilizing this range we can see that TRC’s current Price to Sales per share ratio of 19.56x is significantly below its average levels historically. In fact, with a current price of $32.27, TRC is a full 22% 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 TRC.

TRC Cash Earnings

Price to Cash Earnings analysis is inappropriate for this company due to anticipated negative cash flows for this year. A negative cash flow presents many complications when comparing the company's current value to historically normal valuations. Clearly, when a company fails to earn a profit, it should be a concern for investors. As such, we have taken a negative view on TRC from a cash perspective. We should point out that this metric is a significant element in Ockham’s methodology for analyzing the outlook for any company. Many young companies have come through difficult times like this before; these companies have an opportunity to grow revenue appropriately to bring them around to profitablity. However, for mature company's with a history of positive cash flow this can be much more distressing. Therefore, for TRC, our overall valutaion is now more dependent on the Price to Sales analysis, and investors should be cautious with a company with very limited, if any, positive cash earnings.

TRC 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. As of the time of this report, our data provider does not have historical data for TRC. Therefore, we are not utilizing the dividends portion in our study. So, we do not know whether TRC currently pays a dividend at present or not, we have an "expected dividend" payment listed in key fundamentals but cannot varify it.