Analysts began to consider risks they had previously discounted, lowering acceptable price multiples.
Middle-market purchase-price multiples for LBOs dropped further in the third quarter, averaging 7.2x, down from 8.3x in the second quarter, according to LCD.
Of concern, too, is how much of the recent years' stellar returns have been the result of the expansion of price multiples rather than of earnings.
With that in mind, check out shares of Coach (COH), offering a steadily growing dividend and big discounts to historical price multiples of earnings, sales and book value.
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On page C-1 of the WSJ today reporter Ben Levisohn discovered that many value investors are moving away from price earnings multiples as a key valuation metric.
Price to book and price to sales multiples for LTM are pretty much in line with the industry averages.
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They are trading at about half of what they were priced 10 years ago or more, with brightening prospects of expanding their price-earnings multiples to their historic highs, says Boyar.
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Judging by their price to earnings multiples, which is one way investors gauge whether a stock is priced to perfection, or over done, companies like Ford are trading at flea market prices.
Investors, in their more rational moments, say the high price-earnings multiples of red chips, often two or three times those of blue chips, are justified by the prospects of economic growth on the mainland.
Oberweis follows his father's philosophy of buying profitable companies in the early stages of earnings acceleration to capture gains in earnings per share and an expansion of price-earnings multiples as investors catch on to a company's growth and become willing to pay more for it.
These concerns are reflected in our lowered group valuation multiples and lowered price targets.
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Exceptions: Computer Sciences, Garmin and L-3 Communications Holdings, which carry price-to-sales multiples below five-year averages.
When looking at Price to Tangible Book Value multiples, you have to ask yourself, what are the risks that Tangible Book Value per Share is overstated.
We then narrow the search to stocks trading for less than 25 times projected earnings per share for fiscal 2008, and with price-to-sales multiples below each company's respective five-year average.
The Zweig strategy, based on my understanding, likes stocks with fairly low price-to-earnings multiples, but not so low (below 5) that one has to wonder if there's something really wrong with the company.
Both carry among the highest fast food multiples, but their price-earnings ratios look well-deserved, given their roughly 20% annual growth rates, and plentiful potential.
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Any new electronic gadget had to be the best and newest, and he collected objects in multiples, regardless of price, from radios to construction equipment.
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But, if you modify the forecast up slightly, you can see how the stock can appreciate by multiples of the current market price.
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It appears that Moffett, now past 70, wants to prove up more reserves before he cashes out at multiples of the present stock price.
Rowe Price and BlackRock are awarded above-market multiples of around 20 times earnings.
The only firms that can afford that sort of price are listed companies trading on equally inflated multiples Clear Channel itself is trading at 31 times earnings.
With a commodity producer like Newmont, the value of the company is certainly tied to the price of what the company produces, and multiples also fluctuate.
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Many of the companies that have seen sharp drops from their offering prices were trading at multiples that overestimated future growth: price-to-earnings ratios of 20, 30 or more.
Those multiples are also discounted from average price-to-earnings for the big emerging markets, which are normally closer to 12 in a strong market and as high as 14 during an emerging market bull run.
The recent depression in the stock price has been the single largest factor in making these multiples move to such attractive levels.
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For example, the market has historically been willing to pay 4.5x to 6.7x multiples of cash earnings, but at the current price the stock trades at a price-to-cash earnings of 7.3x.
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But for technology companies Lowy prefers price-to-sales or enterprise-value-to-sales multiples.
He notes that the stock continues to trade at a discount to its peers, such as Kroger (KR) and Safeway (SWY) based on p-e ratios and price-to-EBITDA (earnings before interest, taxes, depreciation and amortization) multiples.
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While top seats on the floor are going for multiples over face value, some of those upstairs are bringing little-to-no price increase.
The stock also looks relatively less expensive according to the price-to-sales, price-to-cash flow (in the sense of net income plus depreciation) and enterprise multiples.
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