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Common Stock Valuation Ratios (Price Multiples)

Difficulty: Beginner

Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).


Current Valuation Ratios

Altria Group Inc., current price multiples

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Altria Group Inc. Philip Morris International Inc. Tobacco Consumer Goods
Selected Financial Data
Current share price (P) $ 48.31
No. shares of common stock outstanding 1,879,045,481
Growth rate (g) 56.04%
 
Earnings per share (EPS) $ 5.44
Next year expected EPS $ 8.49
Operating profit per share $ 5.09
Sales per share $ 13.61
Book value per share (BVPS) $ 8.18
Ratios (Price Multiples)
Price to earnings (P/E) 8.88 19.01 12.64 19.12
Price to next year expected earnings 5.69 0.42 17.36
Price-earnings-growth (PEG) 0.16 0.00 1.88
Price to operating profit (P/OP) 9.50 9.97 9.76 13.52
Price to sales (P/S) 3.55 1.47 1.98 1.83
Price to book value (P/BV) 5.90 62.44 4.70

Based on: 10-K (filing date: 2018-02-27).

If company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.

Otherwise, if company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.


Historical Valuation Ratios (Summary)

Altria Group Inc., historical price multiples

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Price to earnings (P/E) 11.90 10.16 23.30 21.61 15.57
Price to operating profit (P/OP) 12.73 16.51 14.61 14.38 8.74
Price to sales (P/S) 4.76 5.62 4.80 4.47 2.89
Price to book value (P/BV) 7.91 11.33 42.41 36.35 17.15

Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25), 10-K (filing date: 2014-02-26).

Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Altria Group Inc.’s P/E ratio declined from 2015 to 2016 but then slightly increased from 2016 to 2017.
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Altria Group Inc.’s P/OP ratio increased from 2015 to 2016 but then declined significantly from 2016 to 2017.
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Altria Group Inc.’s P/S ratio increased from 2015 to 2016 but then declined significantly from 2016 to 2017.
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. Altria Group Inc.’s P/BV ratio declined from 2015 to 2016 and from 2016 to 2017.

Price to Earnings (P/E)

Altria Group Inc., historical P/E calculation, comparison to benchmarks

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 1,900,449,362 1,939,420,437 1,957,931,815 1,969,316,914 1,992,853,529
Selected Financial Data (USD $)
Net earnings attributable to Altria Group, Inc. (in millions) 10,222  14,239  5,241  5,070  4,535 
Earnings per share (EPS)3 5.38 7.34 2.68 2.57 2.28
Share price1, 2 64.00 74.59 62.38 55.64 35.44
Ratio
P/E ratio4 11.90 10.16 23.30 21.61 15.57
Benchmarks
P/E Ratio, Competitors
Philip Morris International Inc. 26.52 22.84 20.57 17.14 14.60
P/E Ratio, Sector
Tobacco 17.33 14.33 21.75 18.95 14.93
P/E Ratio, Industry
Consumer Goods 20.55 19.00 20.47 21.82 16.94

Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25), 10-K (filing date: 2014-02-26).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Altria Group Inc.’s Annual Report.

2017 Calculations

3 EPS = Net earnings attributable to Altria Group, Inc. ÷ No. shares of common stock outstanding
= 10,222,000,000 ÷ 1,900,449,362 = 5.38

4 P/E ratio = Share price ÷ EPS
= 64.00 ÷ 5.38 = 11.90

Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Altria Group Inc.’s P/E ratio declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

Price to Operating Profit (P/OP)

Altria Group Inc., historical P/OP calculation, comparison to benchmarks

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 1,900,449,362 1,939,420,437 1,957,931,815 1,969,316,914 1,992,853,529
Selected Financial Data (USD $)
Operating income (in millions) 9,556  8,762  8,361  7,620  8,084 
Operating profit per share3 5.03 4.52 4.27 3.87 4.06
Share price1, 2 64.00 74.59 62.38 55.64 35.44
Ratio
P/OP ratio4 12.73 16.51 14.61 14.38 8.74
Benchmarks
P/OP Ratio, Competitors
Philip Morris International Inc. 13.91 14.71 13.31 10.98 9.26
P/OP Ratio, Sector
Tobacco 13.38 15.52 13.88 12.32 9.07
P/OP Ratio, Industry
Consumer Goods 14.53 15.56 15.65 15.73 12.80

Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25), 10-K (filing date: 2014-02-26).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Altria Group Inc.’s Annual Report.

2017 Calculations

3 Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 9,556,000,000 ÷ 1,900,449,362 = 5.03

4 P/OP ratio = Share price ÷ Operating profit per share
= 64.00 ÷ 5.03 = 12.73

Ratio Description The company
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Altria Group Inc.’s P/OP ratio increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Price to Sales (P/S)

Altria Group Inc., historical P/S calculation, comparison to benchmarks

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 1,900,449,362 1,939,420,437 1,957,931,815 1,969,316,914 1,992,853,529
Selected Financial Data (USD $)
Net revenues (in millions) 25,576  25,744  25,434  24,522  24,466 
Sales per share3 13.46 13.27 12.99 12.45 12.28
Share price1, 2 64.00 74.59 62.38 55.64 35.44
Ratio
P/S ratio4 4.76 5.62 4.80 4.47 2.89
Benchmarks
P/S Ratio, Competitors
Philip Morris International Inc. 2.05 2.12 1.91 1.60 1.56
P/S Ratio, Sector
Tobacco 2.72 3.02 2.65 2.28 1.87
P/S Ratio, Industry
Consumer Goods 1.97 1.98 1.83 1.67 1.50

Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25), 10-K (filing date: 2014-02-26).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Altria Group Inc.’s Annual Report.

2017 Calculations

3 Sales per share = Net revenues ÷ No. shares of common stock outstanding
= 25,576,000,000 ÷ 1,900,449,362 = 13.46

4 P/S ratio = Share price ÷ Sales per share
= 64.00 ÷ 13.46 = 4.76

Ratio Description The company
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Altria Group Inc.’s P/S ratio increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Price to Book Value (P/BV)

Altria Group Inc., historical P/BV calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
No. shares of common stock outstanding1 1,900,449,362 1,939,420,437 1,957,931,815 1,969,316,914 1,992,853,529
Selected Financial Data (USD $)
Stockholders’ equity attributable to Altria Group, Inc. (in millions) 15,377  12,770  2,880  3,014  4,119 
Book value per share (BVPS)3 8.09 6.58 1.47 1.53 2.07
Share price1, 2 64.00 74.59 62.38 55.64 35.44
Ratio
P/BV ratio4 7.91 11.33 42.41 36.35 17.15
Benchmarks
P/BV Ratio, Competitors
Philip Morris International Inc.
P/BV Ratio, Sector
Tobacco 85.59 3,704.91
P/BV Ratio, Industry
Consumer Goods 5.05 5.29 4.91 5.49 4.30

Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25), 10-K (filing date: 2014-02-26).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Altria Group Inc.’s Annual Report.

2017 Calculations

3 BVPS = Stockholders’ equity attributable to Altria Group, Inc. ÷ No. shares of common stock outstanding
= 15,377,000,000 ÷ 1,900,449,362 = 8.09

4 P/BV ratio = Share price ÷ BVPS
= 64.00 ÷ 8.09 = 7.91

Ratio Description The company
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. Altria Group Inc.’s P/BV ratio declined from 2015 to 2016 and from 2016 to 2017.