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Stock Relative Valuation Measures (Market-based)

This tool generates various popular valuation measures based on the company’s current performance for you to find out the company’s fair market value, yields and payback period. It uses financial data not just from the last 12 months but over several years to give you a more accurate result.

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Relative Valuation Measures for "RB. RECKITT BENCKISER GROUP PLC"


  • Current share price:
    £66.10
  • Analyst target price:
    £0.00
    Unavailable
  • Net cash per share:
    £-0.06
    (- net debt)

Earnings-based measures

  • P/E: 22.7x*22.8x
    Yield: 4.4%*4.4%

    Last 3-year earnings average
  • P/E: 25.3x*25.3x
    Yield: 4%*4%

    Trailing 12 months earnings
  • Net profit trend Up
    Earnings trend
    (from 2006 to 2016)

Sales-based measures

  • PSR: 4.9x
    Last 3-year sales average
  • PSR: 4.7x
    Trailing 12 months sales
  • Sales trend Up
    Sales trend
    (from 2006 to 2016)

Assets-based measures

  • -8.8x
    Price to tangible book value
    30.8%
    Net cash to tangible book value
    5.1x
    Enterprise value to last 3-year sales average
    25x
    Enterprise value to last 3-year net operating cash flow average
  • Enterprise value per share chart

Cash flow-based measures

  • P/CF: 24.1x*24.2x
    Yield: 4.1%*4.1%

    Last 3-year net operating cash flow average
  • P/CF: 19.1x*19.1x
    Yield: 5.2%*5.2%

    Trailing 12 months net operating cash flow
  • Net operating cashflow trend Up
    Net operating cash flow trend
    (from 2006 to 2016)
  • P/FCF: 24.8x*24.8x
    Yield: 4%*4%

    Last 3-year free cash flow average
  • P/FCF: 22.8x*22.8x
    Yield: 4.4%*4.4%

    Trailing 12 months free cash flow
  • Avg: 1.6x
    TTM: 2.2x

    Assets replacement (Capex to depreciation)
  • Positive free cashflow every year
    100%

    Positive free cash flow every year
    (from 2006 to 2016)

Dividend-based measures

  • Yield: 2.1%
    Last 3-year dividends average
  • Yield: 2.2%
    Trailing 12 months dividends
  • Avg: 1.9x
    TTM: 2x

    Dividend cover by free cash flow
  • Dividend paid out every year
    100%

    Dividends paid out every year
    (from 2006 to 2016)

* Adjusted for net cash - green (or net debt - red)
* P/E - Price to earnings   CF - Cash flow   FCF - Free cash flow
* PSR - Price to sales ratio   TTM - Trailing 12 months   Avg - Weighted average where the later years are more significant
* PEG - P/E to earnings growth   PEGDY - P/E to earnings growth plus dividend yield

Summary

  • Price & Values chart
  • Historic
    PEG: 2.2x
    P/E: 22.7x
    Earnings Growth: 10.5%
    1-Year Forward
    PEG: 0x
    P/E: 0x
    EPS Growth: -100%
    Unavailable
    Historic
    PEGDY: 1.8x
    P/E: 22.7x
    Earnings Growth: 10.5%
    Div Yield: 1.9%
    Ben Graham Formulas
    CAGR: 8.4%
    P/E: 29.5x

Overall Relative Valuation Rating

+Tips & Advice

  • The price to sales ratio (PSR) indicates how much an investor is willing to pay for every dollar of sales for that business. Sales are generally more predictable than earnings and can give a useful indication of the company’s market position compare with its competitors. The ratio is suitable for evaluating companies with strong brands and steady sales. Sales growth from organic operations such as new products and markets are much safer and cheaper than growth from acquisitions.
    The company’s PSR should be compared with that of the industry to determine whether the business is priced at a compelling value to its sales base.
  • The price to earnings ratio (P/E) can be viewed as the number of years that you would get back your initial investment assuming earnings are constant. E.g. P/E of 10 means you would get back your initial investment after 10 years. If earnings trend is upward the payback time would be quicker. For businesses that operate in a cyclical industry with unstable earnings you should use the weighted average of earnings for a more reliable reflection of the company’s earnings power.
  • Although cash flow is generally more volatile than earnings but it is less likely to be manipulated. The price to cash flow ratio measures the company’s cash generation ability in relation to its market price. Businesses with strong cash generation profile are often acquired by private equity firms.
  • Price to tangible book value ratio is more suitable for evaluating companies with lots of physical assets. Businesses that owned assets that are limited in supplies such as oil, natural resource mines and land are ideal candidates for using this ratio as a valuation method. The assets should be evaluated at current market values.
  • The enterprise value gives the theoretical takeover price of the company. The buyer would need to take on the company’s debts but gets to keep the cash in bank. Enterprise value is considered to be more accurate representation of the firm’s value than the simple market capitalization method. In the event of a complete company takeover, the buyer would need to pay for the company’s debts as well.
  • The free cash flow yield tells you the percentage annual return you would get if you own the company outright. Since free cash flow is cash leftover after capital expenditure, it is discretionary cash that can be taken out by the business owner without affecting the company’s competiveness. Free cash flow yield is an excellent method for valuating a business as a trade buyer. Look out for free cash flow generated as the result of cut back on investment in operations as this is unsustainable and reduced the company’s competiveness.
  • The dividend yield tells you the percentage annual return you would get as a shareholder of the company. You get the returns of your investment in the form of dividend payments paid out to you. The total return of your investment would consist of all the dividend payments collected and any gains in share price when you sell the stock. Businesses that generate regular free cash flow and strong balance sheet are generally safe dividend payers.
  • The PEGDY ratio is favoured by Peter Lynch for measuring the attractiveness of a stock. A ratio of 0.75 or less is good value.
  • The Ben Graham formulas are used to calculate the stock’s implied annual earnings growth and P/E ratio with respect to its market price. You can use these two measures to judge whether the stock is over-priced or not.