NASDAQ:PLPC
$38.84
(3/17 4:00PM)
+1.9%
| Open | $37.86 |
Mkt Cap | $200.1 Million |
| High | $39.12 |
52Wk High | $49.67 |
| Low | $37.86 |
52Wk Low | $32.50 |
| Volume | 24,436 |
Avg Vol 10D | 11,200 |
Ockham's Rating/Recommendation Summary
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PLPC 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, PLPC the high and low end of the Price to Sales per share ratios are 1.37x and 0.74x respectively.
Notice that PLPC's current Price to Sales per share ratio is 0.79x, which is well below its normal historic Price to Sales levels. At a price of $37.55, PLPC is 26% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.
PLPC 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 PLPC, 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 PLPC. For example, PLPC's Cash Earnings ratio per share has fluctuated between 8.29 and 15.24 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where PLPC is with respect to prior business periods.
So with PLPC's current price (latest close of $37.55) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, PLPC is 28% 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 PLPC.
PLPC 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 PLPC, 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. PLPC’s estimated annual dividend is $0.80 resulting in a current dividend yield of 2.13%. The highest dividend yield from PLPC over recent history was 6.02% while the lowest dividend yield was 0.00%. It is never a good sign for a company to pay significantly lower dividends, in this case 29.24% below the median yield. Although, dividends are a relatively small portion of our analysis framework, we still see this as a negative factor.
