The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

AW Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, 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, AW the high and low end of the Price to Sales per share ratios are 0.79x and 0.46x respectively.

Notice that AW's current Price to Sales per share ratio is 0.62x, which is below its historical average only slightly. So, while not a huge positive for our analysis, we do feel it is worth noting that AW does look a bit undervalued on a Price to Sales basis, all other factors being equal. However, if the Price to Sales ratio drops further, Ockham Research is likely to become more bullish on this stock.

AW Cash Earnings

As the old saying goes, "Cash is King!" However, we prefer to capture a few other items within our analysis to identify "cash earnings". Nevertheless, an analysis of Cash Earnings is absolutely pivotal to assessing a company's value, and currently AW is below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for AW, the current level of Cash Earnings compared to its historical levels helps identify where AW 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 6.56 and a historical low Cash Earnings per share ratio of 3.80, an investor can relate where value becomes optimal.

With a historical average Cash Earnings ratio of 5.18, the current Cash Earnings ratio of 4.73 is a positive opportunity for value in the Ockham view. Naturally, we would love to see a deeper value opportunity for AW, but to get there one of two things must occur (or both). Either the stock price must decline further to increase the long term buying opportunity, or the management at AW needs to earn more cash. If either, or both, of these occur, then we could see a significant gap emerge between what investors were willing to pay for in the past, and where AW is trading currently (latest close price of $10.74).

AW 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 on a company's inherent expectations. AW is not paying a dividend at this time, nor do they have a history of paying a dividend for the last 10 years plus. Therefore, we are not utilizing the dividends portion in our study. If AW initiates paying a dividend, we will begin to factor this into the Ockham approach.