The Razor’s Edge

2-Year Price History

Ockham’s Rating

Rating Specific Information Withheld Premium Access Only

RDSA 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 RDSA through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 5 years are 0.70x and 0.47x respectively.

Utilizing this range we can see that RDSA’s current Price to Sales per share ratio of 0.37x is significantly below its average levels historically. In fact, with a current price of $53.45, RDSA is a full 37% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for RDSA.

RDSA 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 RDSA is significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 5 years of cash earnings levels for RDSA to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 5.93 and a 3.91 low over the same period.

Now that RDSA’s current price is $53.45 and its Price to Cash Earnings ratio is 3.35, we are very positive on its outlook from the cash earnings perspective. In fact, RDSA is now trading a full 32% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why RDSA 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.

RDSA Dividends

When determining a company’s future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn’t imperative for RDSA to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for RDSA is $3.20 producing a current dividend yield of 5.99%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from RDSA against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from RDSA over previous years was 7.69% while the lowest dividend yield was 1.64%. It’s hard not to notice that RDSA pays a current dividend yield that is 28.40% above the historical median. This peaks our interest since our analysis is looks favorably upon dividend yields that are greater than the historical median.