USLM Investment Analysis Report & Stock Research, United States Lime & Minerals, Inc.

USLM 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, USLM the high and low end of the Price to Sales per share ratios are 2.33x and 1.11x respectively.

Notice that USLM's current Price to Sales per share ratio is 2.14x, which is well above its historical average. This means that USLM looks relatively expensive compared to its historical Price to Sales average, and thus it is more difficult to believe that there is significant price appreciation potential. In order for the stock to become more attractive, we would like to see a decline in the Price to Sales ratio of 24% just to return USLM to its historical average.

USLM Cash Earnings

As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently USLM is 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 USLM. For example, USLM's Cash Earnings ratio per share has fluctuated between 5.41 and 11.18 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where USLM is with respect to prior business periods.

So when we look at USLM, 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 USLM couldn't rapidly improve in its value from other factors or a decline in stock price. The current Price to Cash Earnings level of 9.24 is 11% above the historical norm as calculated at Ockham. So a decline in stock price, or more hopefully, an increase in USLM's Cash Earnings levels would improve our outlook for the stock.

USLM 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.