Welcome to the top twenty something index issues of the PSEi that have big market capitalization, plus some banks and financial big caps as well
UNIVERSAL ROBINA CORPORATION – URC
CURRENT PRICE = PhP 63.95 (as of 092112)
P/E RATIO TEST:
2009 Earnings-per-share = PhP 1.8100
2010 Earnings-per-share = PhP 3.7500
2011 Earnings-per-share = PhP 2.2500
2012 2H Earnings-per-share = PhP 2.7300
Average earnings-per-share (based on the past 3 years and 3 quarters) = PhP 2.8625
Average price earnings ratio (based on the past 3 years and 3 quarters) = 22.34
Benjamin Graham recommends current price no more than 15 times average earnings (should be positive) over the past three years. This issue failed Graham’s price-earnings ratio test.
However, threshold value, P/E <15 should be taken as arbitrary level. Ratios do not tell us the whole story by itself. It is more useful to compare the ratios of one company to other companies in the same industry.
PRICE-TO-BOOK RATIO TEST:
Total Equity = PhP 51,683,743,000
Outstanding Shares = 2,181,501,933
Book-Value per Share = PhP 23.6918
Price-to-Book ratio (PB) = 2.70
Graham recommends that current price should not be more than 1.5 times the book value last reported.
This issue failed Graham’s price-to-book ratio test.
However, Threshold value, P/B <1.5 should be taken as arbitrary level. It is more useful to compare the ratios of one company to other companies in the same industry.
NET-WORKING-CAPITAL OR “RARE BARGAIN” TEST:
Current Asset = PhP 48,391,394,000
Total Liabilities = PhP 26,095,367,000
Net Working Capital = PhP 22,296,027,000
Current Asset to Total Liabilities ratio = 1.85
* By “net-working-capital”, Graham means current assets (such as cash, marketable securities, and inventories) minus total liabilities (including preferred stock and long-term debt).
Current asset is greater than total liabilities.
Graham recommends issues with positive net-working-capital.
This issue passed Graham’s net-working-capital or “RARE BARGAIN” test.
Likewise, equity is greater than total liabilities.
Total liabilities to equity ratio = 0.50
This company is relatively low leveraged (not so burdened with debt).
GRAHAM’S “BLENDED MULTIPLIER” TEST:
P/E = 22.34
P/B = 2.70
P/E*P/B = 60.30
Graham suggests that the product of P/E and P/B should not exceed 22.5 (should be positive).
This issue failed Graham’s “blended multiplier” test.
However, threshold value, P/E*P/B <22.5 should be taken as arbitrary level. It is more useful to compare the ratios of one company to other companies in the same industry.
LIMITATION OF THE ANALYSIS:
1. EPS calculation does not isolate “other income” and “extra-ordinary income”.
2. Analysis does not cover earnings stability, dividend records, earnings growth and futures earnings (or forward P/E ratio).
3. For future plans and prospects, read below reference.
http://www.pse.com.ph/resource/corpt/20 ... un2012.pdf
http://www.pse.com.ph/resource/corpt/20 ... ep2011.pdf
If You're So Smart, Why Aren't You Rich? - BATMAN The Animated Series: Season 1, Episode 41
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