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 "WPP WPP PLC"

Current share price:
£8.35
Analyst target price:
£0.00
Unavailable
Net cash per share:
£-3.18
(- net debt)

Earnings-based measures

P/E: 17.8x*24.6x
Yield: 5.6%*4.1%
Overall earnings average
P/E: 23.1x*31.9x
Yield: 4.3%*3.1%
Last 3-year earnings average
P/E: 81.6x*112.7x
Yield: 1.2%*0.9%
Trailing 12 months earnings
Down
Earnings trend
(from 2006 to 2023)

P/E: 15.6x*21.6x
Yield: 6.4%*4.6%
Earnings derived from overall net profit margin average
P/E: 22x*30.4x
Yield: 4.5%*3.3%
Earnings derived from 3-year net profit margin average
All: 3.9%
3Yr: 2.8%
TTM: 0.7%
Net profit margin

P/E: 35.9x*49.5x
Yield: 2.8%*2%
Earnings derived from overall ROE average
P/E: 25.7x*35.5x
Yield: 3.9%*2.8%
Earnings derived from 3-year ROE average
All: 7.4%
3Yr: 10.3%
TTM: 3.1%
Return on equity

Sales-based measures

PSR: 0.7x
Overall sales average
PSR: 0.6x
Last 3-year sales average
PSR: 0.6x
Trailing 12 months sales
Up
Sales trend
(from 2006 to 2023)

Assets-based measures

-1.3x Price to tangible book value	53.3% Net cashto tangible book value
0.9x Enterprise value to last 3-year sales average	10.7x Enterprise value to last 3-year net operating cash flow average

Cash flow-based measures

P/CF: 6.2x*8.6x
Yield: 16.1%*11.7%
Overall net operating cash flow average
P/CF: 7.5x*10.4x
Yield: 13.3%*9.6%
Last 3-year net operating cash flow average
P/CF: 7.3x*10x
Yield: 13.8%*10%
Trailing 12 months net operating cash flow
Up
Net operating cash flow trend
(from 2006 to 2023)

P/FCF: 7.7x*10.6x
Yield: 13%*9.4%
Overall free cash flow average
P/FCF: 9.4x*12.9x
Yield: 10.7%*7.7%
Last 3-year free cash flow average
P/FCF: 8.8x*12.1x
Yield: 11.4%*8.2%
Trailing 12 months free cash flow
100%

Positive free cash flow every year record
(from 2006 to 2023)

Dividend-based measures

Yield: 4.9%
Overall dividends average
Yield: 4.3%
Last 3-year dividends average
Yield: 4.7%
Trailing 12 months dividends

Overall: 3.7x
3Yr: 2.6x
TTM: 2.4x
Dividend cover by free cash flow
100%

Dividends paid out every year record
(from 2006 to 2023)

* 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

Historic PEG: -3x P/E: 23.1x Earnings Growth: -7.8%	1-Year Forward PEG: 0x P/E: 0x EPS Growth: 0% Unavailable
Historic PEGDY: -8x P/E: 23.1x Earnings Growth: -7.8% Div Yield: 4.9%	Ben Graham Formulas CAGR: 36.6% P/E: -7.1x

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.