BEAV Investment Analysis Report & Stock Research, B E Aerospace Inc

Ockham's Rating/Recommendation Summary

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BEAV 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, BEAV the high and low end of the Price to Sales per share ratios are 1.91x and 0.67x respectively.

Notice that BEAV's current Price to Sales per share ratio is 1.25x, which is somewhat below its historical weighted average by 4%. 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.

BEAV Cash Earnings

When reviewing a company and their prospects for success, it is necessary to analyze their ability to generate positive Cash Earnings. This is a vital component to our analysis, because as a long term investment research firm, there are few factors more closely tied to the valuation of a company as Cash Earnings. In the case of BEAV, it appears that either the current estimate for Cash Earnings is negative or BEAV is not likely to generate positive Cash Earnings based upon their prior performance in the last several quarters. Remember that Cash Earnings is not the only way to value a company's potential, but in our analysis it is the most important. Thus, for our analysis BEAV receives a negative score from a Cash perspective. At Ockham, we are fond of saying "Cash is King," and in this case the company is not generating any. If a company is not able to generate a profit then there is no reason to invest in them. Unless of course you believe in the story, and hope it will eventually lead to a profitable enterprise.

BEAV 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. Although they may currently pay a dividend, our data source has no historical record of it for BEAV. Since we cannot apply our historical trend analysis to dividends for BEAV we have a neutral score for the dividend portion of our analysis.