NYSE:WBK
$122.69
(10/21 2:33PM)
+1.4%
| Open | $121.21 |
Mkt Cap | $45.9 Billion |
| High | $123.35 |
52Wk High | $124.26 |
| Low | $121.21 |
52Wk Low | $45.16 |
| Volume | 4,855 |
Avg Vol 10D | 17,200 |
Ockham’s Rating/Recommendation Summary
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WBK 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 WBK 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 3.30x and 1.95x respectively.
Utilizing this range we can see that WBK’s current Price to Sales per share ratio of 1.76x is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $122.30, WBK is 34% below where we would expect to see it. This will beneficially factor into our final analysis of WBK as it is not often that this stock sinks to these levels.
WBK 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 WBK is below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for WBK, the current level of Cash Earnings compared to its historical levels helps identify where WBK is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 20.07 and a historical low Cash Earnings per share ratio of 12.57, an investor can relate where value becomes optimal.
So what does a Cash Earnings ratio below the historical norm mean for WBK? Generally, WBK’s investors have paid slightly higher stock prices for this level of Cash Earnings, which bodes well as a return to historical norms is statistically likely. However, it is never a guarantee that history gives us proper direction, particularly in fluctuating market cycles. So by utilizing a long term view and incorporating other areas of analysis (like Sales, Dividends, and management analysis), each investor can gain a more complete view of WBK. Remember, that the average Cash Earnings level for WBK has been 16.32, so the current Cash Earnings level of 15.17 is a positive in our view, but by no means is it overwhelming.
WBK 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 WBK against the historic high and low levels over an available data range. Because WBK has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In WBK’s case, the estimated annual dividend is $4.17 producing a current dividend yield of 3.41%. The highest dividend yield from WBK in recent history was 9.23% while the lowest dividend yield was 3.36%. It is never a good sign for a company to pay significantly lower dividends, in this case 45.83% below the median yield. Although, dividends are a relatively small portion of our analysis framework, we still see this as a negative factor.
