HNZ Stock Report

2-Year Price History

Ockham’s Rating

HNZ Revenue

As a value investing shop, we are interested in seeing how HNZ’s revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock’s current underlying value. Using this method, we have established a high range for Price to Sales of 1.58x and the low end of the range at 1.19x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for HNZ of 0.98x is well below its normal historic Price to Sales levels. At a price of $35.80, HNZ is 30% 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.

HNZ 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 HNZ is 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 HNZ. For example, HNZ’s Cash Earnings ratio per share has fluctuated between 10.50 and 13.86 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where HNZ is with respect to prior business periods.

Now that HNZ’s current price is $35.80 and its Price to Cash Earnings ratio is 9.37, we are very positive on its outlook from the cash earnings perspective. In fact, HNZ is now trading a full 24% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why HNZ has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

HNZ 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 HNZ against the historic high and low levels over an available data range. Because HNZ has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In HNZ’s case, the estimated annual dividend is $1.68 producing a current dividend yield of 4.69%. The highest dividend yield from HNZ in recent history was 5.51% while the lowest dividend yield was 2.77%. A current dividend yield of 13.29% above the historical median is favorable in our analysis of HNZ.