The Razor’s Edge

2-Year Price History

Ockham’s Rating

Rating Specific Information Withheld Premium Access Only

SSL 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 SSL 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 1.99x and 1.16x respectively.

Utilizing this range we can see that SSL’s current Price to Sales per share ratio of 0.86x is significantly below its average levels historically. In fact, with a current price of $28.56, SSL is a full 46% 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 SSL.

SSL Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. SSL 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 10 years of cash earnings levels for SSL 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 10.29 and a 5.98 low over the same period.

Now that SSL’s current price is $28.56 and its Price to Cash Earnings ratio is 6.04, we are very positive on its outlook from the cash earnings perspective. In fact, SSL is now trading a full 26% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why SSL 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.

SSL 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 SSL 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 SSL is $2.26 producing a current dividend yield of 7.91%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from SSL 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 SSL over previous years was 11.80% while the lowest dividend yield was 1.88%. If you are looking for some “bang for your buck” then a dividend yield of 15.64% above the historically median should be enticing. SSL receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.