VAL Stock Report

2-Year Price History

Ockham’s Rating

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VAL Revenue

As a value investing shop, we are interested in seeing how VAL’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 0.96x and the low end of the range at 0.71x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for VAL of 0.63x is well below its normal historic Price to Sales levels. At a price of $22.38, VAL is 26% 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.

VAL Cash Earnings

Looking at VAL specifically in their Cash Earnings capabilities, Ockham views VAL as 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 VAL. For example, VAL’s Cash Earnings ratio per share has fluctuated between 9.53 and 12.94 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where VAL is with respect to prior business periods.

So what does this tell us about VAL in particular? Basically, we would value the current level of Cash Earnings per share (which is at 13.09) as significantly overvalued. Just by looking at the last closing price of VAL, which was $22.38, we can see that compared to the historical high Price to Cash Earnings levels we calculated, the market has already rewarded VAL with a higher stock price. So basically, we don’t view this level of Cash Earnings or stock price as compatible with a long term value at this point. Just remember, that does not mean that VAL may not have other merits with which to find a good investment opportunity, it just means that we would prefer to see either an increase in Cash Earnings or a decrease in stock price before we would become bullish on this metric.

VAL 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 VAL 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 VAL is $0.60 producing a current dividend yield of 2.68%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from VAL 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 VAL over previous years was 4.15% while the lowest dividend yield was 1.12%. VAL has shown confidence by hiking up the dividend yield to 1.71% above the historical median.