Price to Operating Profit (P/OP)
since 2005
Calculation
Monsanto Co., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Income from operations1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Oct 27, 2017 | 16.65 | = | 121.52 | ÷ | 7.30 | 7.30 | = | 3,212 | ÷ | 440,199,969 | |
| Oct 19, 2016 | 18.90 | = | 102.49 | ÷ | 5.42 | 5.42 | = | 2,375 | ÷ | 437,982,595 | |
| Oct 29, 2015 | 11.70 | = | 93.73 | ÷ | 8.01 | 8.01 | = | 3,523 | ÷ | 439,837,164 | |
| Oct 29, 2014 | 13.33 | = | 112.18 | ÷ | 8.42 | 8.42 | = | 4,075 | ÷ | 484,073,332 | |
| Oct 23, 2013 | 15.85 | = | 107.62 | ÷ | 6.79 | 6.79 | = | 3,570 | ÷ | 525,837,818 | |
| Oct 19, 2012 | 15.06 | = | 88.69 | ÷ | 5.89 | 5.89 | = | 3,148 | ÷ | 534,598,091 | |
| Nov 14, 2011 | 15.92 | = | 74.39 | ÷ | 4.67 | 4.67 | = | 2,502 | ÷ | 535,409,098 | |
| Oct 27, 2010 | 20.11 | = | 60.25 | ÷ | 3.00 | 3.00 | = | 1,607 | ÷ | 536,392,459 | |
| Oct 27, 2009 | 12.52 | = | 71.27 | ÷ | 5.69 | 5.69 | = | 3,103 | ÷ | 545,055,022 | |
| Oct 24, 2008 | 14.49 | = | 71.95 | ÷ | 4.97 | 4.97 | = | 2,721 | ÷ | 547,941,657 | |
| Oct 26, 2007 | 36.32 | = | 94.28 | ÷ | 2.60 | 2.60 | = | 1,418 | ÷ | 546,319,136 | |
| Nov 2, 2006 | 20.39 | = | 44.17 | ÷ | 2.17 | 2.17 | = | 1,177 | ÷ | 543,300,591 | |
| Nov 8, 2005 | 22.84 | = | 31.56 | ÷ | 1.38 | 1.38 | = | 742 | ÷ | 536,968,150 |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31), 10-K (reporting date: 2011-08-31), 10-K (reporting date: 2010-08-31), 10-K (reporting date: 2009-08-31), 10-K (reporting date: 2008-08-31), 10-K (reporting date: 2007-08-31), 10-K (reporting date: 2006-08-31), 10-K (reporting date: 2005-08-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of Monsanto Co. Annual Report.
Analysis of the Price to Operating Profit (P/OP) ratio reveals a period of significant volatility in market valuation relative to operational performance between 2005 and 2017.
- Share Price and Operating Profit Trends
- A general long-term upward trajectory is observed in both share price and operating profit per share. The share price increased from 31.56 US$ in 2005 to 121.52 US$ in 2017. Similarly, operating profit per share grew from 1.38 US$ to 7.30 US$ over the analyzed period, although this growth was non-linear, reaching a peak of 8.42 US$ in 2014.
- Valuation Multiple Volatility
- The P/OP ratio exhibited a substantial peak in 2007 at 36.32, indicating a period of high market premiums. This was followed by a sharp contraction in 2008 and 2009, where the ratio dropped to 14.49 and 12.52 respectively. This decline occurred despite a simultaneous increase in operating profit per share, suggesting a market-driven devaluation of the company's operational earnings.
- Divergence Between Profitability and Valuation
- Between 2011 and 2015, a notable divergence is observed. While operating profit per share climbed to its maximum of 8.42 US$ in 2014, the P/OP ratio continued a gradual downward trend, reaching its lowest point of 11.70 in 2015. This indicates that the market valuation multiple compressed even as the underlying operational profitability improved.
- Recent Valuation Adjustment
- A recovery in the valuation multiple is evident from 2015 to 2017, with the P/OP ratio rising from 11.70 to 16.65. This upward shift suggests a moderate expansion in the premium the market was willing to pay for operating profits toward the end of the period.
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Comparison to Competitors
Monsanto Co., P/OP, long-term trends, comparison to competitors
| Monsanto Co. | lululemon athletica inc. | |
|---|---|---|
| Oct 27, 2017 | 16.65 | 21.58 |
| Oct 19, 2016 | 18.90 | 25.22 |
| Oct 29, 2015 | 11.70 | 24.15 |
| Oct 29, 2014 | 13.33 | 19.02 |
| Oct 23, 2013 | 15.85 | 24.82 |
| Oct 19, 2012 | 15.06 | 38.00 |
| Nov 14, 2011 | 15.92 | 30.18 |
| Oct 27, 2010 | 20.11 | 32.10 |
| Oct 27, 2009 | 12.52 | 10.39 |
| Oct 24, 2008 | 14.49 | 44.74 |
| Oct 26, 2007 | 36.32 | — |
| Nov 2, 2006 | 20.39 | — |
| Nov 8, 2005 | 22.84 | — |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31), 10-K (reporting date: 2011-08-31), 10-K (reporting date: 2010-08-31), 10-K (reporting date: 2009-08-31), 10-K (reporting date: 2008-08-31), 10-K (reporting date: 2007-08-31), 10-K (reporting date: 2006-08-31), 10-K (reporting date: 2005-08-31).