Today’s Stock & Business Times
Earnings are coming out from companies and so far I’m pretty happy about what I’m reading about current business times and the financial markets today. Keep in mind it is very early in earning season but I was a little worried that the election and the fiscal cliff worries froze consumers and businesses alike. What I’ve seen so far does not show many signs of a problem. There was not big growth in the fourth quarter, but not a big investment pullback that I was expecting.
I’m receiving many requests for companies that readers want me to review, thank you for your requests I will try to do as many as I can.
I received a request from Mark about a company called PolyOne Corp, POL is their stock symbol. I always recommend investors to understand what the business does that they are investing in; it was kind of hard with this company because I didn’t understand what Polymer materials are which is what this company provides, along with services and solutions with operations in special polymer formulations. This company has a complex product and if you are going to invest in this company I would recommend a further understanding of what they do. In the current uncertain business times, any investment you consider, should be well researched and based on a highly informed decision.
Looking at the valuations and overall stock prices, this company is not cheap. Trading at 25 times earnings and 16.5 times December 2013 forward earnings per share (16.5 times earnings is my target sell multiple). I also noticed that backing out the intangible assets leaves investors with a negative equity investment position. Sales did climb 4% year over year which was better than the industry sales growth of 0.2%. However earnings per share fell by 66% for PolyOne when the industry only declined by 11.5%.
Learn More About Company Stock Growth Rates Here:
The industry of chemicals in which this company competes has a debt to equity of 65%, not too bad. PolyOne has a debt to equity of 112% and remember that some of their equity is in intangible assets and could be written down if accounting test isn’t met on the value of those assets which would raise the debt to equity even more. Return On equity looked okay at 13.1% but it was still under the stock prices industry average of 18.7%. Profit margin for the company came in at 2.8% well below the industry average of 6.2%. Inventory does look good for the company turning over 9.7 times over the last 12 months compared to the industry turnover rate of 6.1 times.
The company reports earnings on the 28th of January so while investors may miss some on the upside one will get a better look of what the company is doing and also analysts estimates will extend out to December 2014 perhaps increasing the target sell price.
In any business times, whether good or bad, there are always multiple factors to consider when making an investment in the financial markets today. Call me anytime with any of your questions.
Visit my website www.SmartInvesting2000.com to learn more.
Brent Wilsey, Your Money Maker
Wilsey Asset Management