PRX Investment Analysis Report & Stock Research, Par Pharmaceutical Companies, Inc.

PRX Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, PRX the high and low end of the Price to Sales per share ratios are 2.43x and 0.99x respectively.

Notice that PRX's current Price to Sales per share ratio is 0.75x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $25.59, PRX is 57% below where we would expect to see it. This will beneficially factor into our final analysis of PRX as it is not often that this stock sinks to these levels.

PRX 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. PRX is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for PRX, the current level of Cash Earnings compared to its historical levels helps identify where PRX is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 38.09 and a historical low Cash Earnings per share ratio of 18.57, an investor can relate where value becomes optimal.

Now that PRX’s current price is $25.59 and its Price to Cash Earnings ratio is 7.95, we are very positive on its outlook from the cash earnings perspective. In fact, PRX is now trading a full 72% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why PRX 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.

PRX Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations. PRX may pay a dividend at this time; however, there is an insufficient amount of history to incorporate it into our analysis. Therefore, we are not utilizing the dividends or lack thereof in our study. As PRX more consistent dividend history is made available, we will begin to factor this into the Ockham approach.