NYSE:TEG
$46.89
(3/18 4:00PM)
+0.1%
| Open | $47 |
Mkt Cap | $3.6 Billion |
| High | $47.14 |
52Wk High | $47.43 |
| Low | $46.62 |
52Wk Low | $24.95 |
| Volume | 438,482 |
Avg Vol 10D | 583,900 |
Ockham's Rating/Recommendation Summary
Rating specific information requires Premium Access.
Buy Now
or
Learn More about Ockham's Features and Services.
TEG Revenue
For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at TEG through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 0.45x and 0.31x respectively.
Utilizing this range we can see that TEG’s current Price to Sales per share ratio of 0.47x is high enough compared with historical norms of TEG to cause some concern. The current Price to Sales per share is near the upper end of the historical range. In our eyes, this is a negative factor because it is more likely that it will return to the normal range than continue rising outside of the range. At current sales per share levels, we would need to see a decline in the Price to Sales ratio of 24% merely to return TEG to its historical average.
TEG 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 TEG is significantly 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 TEG. For example, TEG's Cash Earnings ratio per share has fluctuated between 8.33 and 12.80 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where TEG is with respect to prior business periods.
Just recall that when a stock's price, as in the cases of TEG, is significantly elevated to the level of Cash Earnings being generated, the market has already priced in much of that value. For example, the historical average for TEG's Price to Cash Earnings ratio is 111% below the current ratio of 22.31. That is not an insignificant amount, and diminishes our overall outlook on TEG. However, you need to review several areas of a company's potential, and as management would point out, one metric is not the end-all-be-all of any analysis.
TEG 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.
Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from TEG against the historic high and low levels over an available data range. Because TEG has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In TEG’s case, the estimated annual dividend is $2.72 producing a current dividend yield of 5.86%. The highest dividend yield from TEG in recent history was 13.99% while the lowest dividend yield was 3.37%. With that range in mind, TEG’s current dividend yield is a full 32.49% below its median dividend yield historically. This is a negative from our perspective.
