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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (13920)	2/13/2002 1:45:06 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78627

Yeoh! Thanks for mentioning that site!!! Totally slipped my mind. More on WSRN: In my opinion, in eliminating annual p/sales and book value/sh, they are saying these figures are not as important to their readers as other metrics which they substituted. There are now four eps figures which give primary and diluted and incl. and excluding (extraordinary charges). Seems like overkill, but with accounting scandals upon us, maybe not. More on PSR: There've been many discussions here over the years on the importance of price/sales in determining value. There was a Ken Fisher thread for a while on SI, but it died - imo, because the price to sales ratio must usually be used with other metrics in analyzing a stock. It isn't helpful that Ken Fisher himself rarely if ever mentions his work on the subject ("Super Stocks") in his Forbes column. I'm of the opinion he has concluded psr is not significant to him in his stock selections. In the media reports in which low p/sales is mentioned as a desirable criterion, "low" is rarely defined. We know that grocery stores, which overall have small margins but high volume dollar sales, will have "low" psrs. Similarly, in industries where profit margins are high (e.g. municipal bond insurers), those psr tend to be "high". It's my inference that most analysts and business journalists compare a company's psr to its sector's psr in order to gauge whether the psr is low or high. I like to compare a company's psr with its past psr numbers though. Only recently have I seen this also stated by other investors. In last week's Barron's, Peter Larson, of the Galaxy Small-Cap Value Fund, was described as using psrs in the following way, "Unlike many fund managers, Larson doesn't set price targets for his stocks. Instead, he and the fund's analysts compare a company's current price-to-sales ratio against historic trends, and against its market value. Without firm price targets, Galaxy often allows its winners to ride past the point at which other managers might take profits, another factor which has helped its performance." It isn't quite clear to me what is meant by some of this, but I read into it that he compares current psr to past psrs for the same company when he makes his sales decision. I use the metric this way also, but find that when it's helpful, it's more helpful for me in the buy decision. Paul Senior jmo, and I could be very, very wrong. (Afterall, I can't even remember where there's a site to look at the little darlings. -g-)