Monsanto Co. (NYSE:MON)

Price to Earnings (P/E) Ratio

The P/E ratio exhibited a general downward trend from 23.19 in 2012 to 17.82 in 2015, indicating a decrease in market valuation relative to earnings. However, in 2016, there was a significant spike to 33.6, suggesting a sharp increase in investor valuation or a drop in earnings during that year. The ratio then moderated to 23.67 in 2017, reflecting partial normalization but remaining higher than the earlier years.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio showed a similar pattern to the P/E ratio, declining steadily from 15.06 in 2012 to 11.7 in 2015, which may suggest improved operating profitability relative to stock price. This was followed by an increase to 18.9 in 2016, indicating a marked rise in valuation or decline in operating profit. In 2017, the ratio decreased slightly to 16.65 but remained elevated compared to the pre-2016 period.

Price to Sales (P/S) Ratio

The P/S ratio decreased from 3.51 in 2012 to a low of 2.75 in 2015, pointing to a reduction in valuation relative to sales or growth in sales outpacing price increases. From 2015 onward, the ratio increased to 3.32 in 2016 and further to 3.65 in 2017, which may reflect either a higher market valuation relative to sales or slower sales growth during these years.

Price to Book Value (P/BV) Ratio

The P/BV ratio displayed an increasing trend with some fluctuations, rising from 4.01 in 2012 to a peak of 9.9 in 2016. This suggests growing market valuation relative to the company's book value, implying greater investor confidence or increased intangible asset value recognition. In 2017, the ratio slightly declined to 8.31 yet remained significantly above the earlier years, indicating sustained high valuation relative to book value.

Overall Insights

Across all valuation multiples, the period from 2012 to 2015 shows a general decline, indicating a reduction in market valuation relative to earnings, operating profit, sales, and book value. The subsequent years, especially 2016, show notable increases in these ratios, pointing to a shift in market sentiment or changes in the company’s financial performance. The sharp increases in 2016 ratios underline a potential re-rating event or financial fluctuations during that year, with slight moderation observed in 2017. The pronounced rise in P/BV suggests amplified investor expectations not fully supported by book value changes.

Share Price

The share price experienced a general upward trend over the analyzed period. It increased from $88.69 in 2012 to $121.52 in 2017, with a notable peak in 2014 at $112.18, followed by a dip in 2015 to $93.73. After 2015, the share price resumed its rise, reaching its highest point in 2017.

Earnings Per Share (EPS)

The EPS showed growth from 2012 to 2014, moving from $3.83 to $5.66. In 2015, there was a slight decline to $5.26, followed by a significant drop in 2016 to $3.05. The EPS rebounded considerably in 2017 to $5.13, nearing the 2014 peak but not surpassing it.

Price to Earnings (P/E) Ratio

The P/E ratio demonstrated variability correlating with share price and EPS changes. It decreased steadily from 23.19 in 2012 to 17.82 in 2015, reflecting improving earnings relative to price or a falling share price. However, in 2016, the P/E ratio surged to 33.6, driven by the sharp drop in EPS despite a moderate share price increase. In 2017, the ratio decreased to 23.67, indicating a partial normalization as earnings improved alongside the rising share price.

Overall Trends and Insights

The data reflects volatility in earnings performance, particularly in 2016, which caused significant fluctuations in valuation multiples. The share price trend suggests investor confidence remained broadly positive with some corrections, while EPS volatility affected the P/E ratio more noticeably. The recovery in earnings in 2017 was accompanied by a robust share price increase that brought valuation metrics closer to earlier levels seen in the period.

The analysis of the financial data reveals several notable trends over the six-year period ending August 31, 2017.

Share Price

The share price exhibited an overall upward trajectory, starting at $88.69 in 2012 and rising to $121.52 by 2017. There was a peak in 2014 at $112.18, followed by a decline to $93.73 in 2015, and a subsequent recovery and increase in the final two years. This pattern suggests some volatility but a general increase in market valuation.

Operating Profit Per Share (US$)

Operating profit per share demonstrated growth from 2012 ($5.89) to 2014 ($8.42), indicating improved operational efficiency or profitability. However, there was a slight decline in 2015 to $8.01, followed by a significant drop to $5.42 in 2016. The figure then rebounded to $7.30 in 2017, signifying some recovery in operational performance but not reaching the 2014 peak.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio decreased from 15.06 in 2012 to a low of 11.7 in 2015, which may reflect a more favorable valuation relative to operating profit during that period. However, it sharply increased to 18.9 in 2016, which could indicate that the share price was high relative to operating profit—likely due to the decline in operating profit that year. In 2017, the ratio decreased again to 16.65, suggesting some normalization but still a relatively high valuation.

In summary, while the share price generally increased over the period, the operating profit per share fluctuated with a notable dip in 2016 before partial recovery. The P/OP ratio variations highlight changes in market expectations or valuation relative to operational profitability, particularly emphasizing the unusual conditions in 2016. This mixed pattern indicates a period of operational challenges offset partly by positive investor sentiment or market factors affecting share valuation.

Share Price Trend

The share price demonstrated an overall upward trend from 2012 to 2017, beginning at $88.69 in 2012 and increasing to $121.52 by 2017. There was a notable peak in 2014 at $112.18, followed by a decline in 2015 to $93.73. Subsequently, the price recovered in 2016 and 2017, reaching its highest value in the observed period.

Sales Per Share Analysis

Sales per share consistently increased from 2012 through 2015, moving from $25.26 to $34.11. However, in 2016 there was a decline to $30.83, before rising again in 2017 to $33.26. This indicates relative stability with slight fluctuations, maintaining a generally positive trend in sales performance per share over the years.

Price-to-Sales Ratio (P/S) Insights

The P/S ratio began at 3.51 in 2012, increased to 3.81 in 2013, and then declined sharply to 2.75 in 2015, indicating a decrease in valuation relative to sales despite increasing sales per share during this period. After 2015, the ratio rose again, reaching 3.65 in 2017, which aligns with the recovery in share price and sales per share. This pattern suggests market valuation became more favorable after 2015.

Overall Observations

The data reflects a correlation between share price movements and P/S ratio fluctuations, with sales per share steadily rising except for a temporary dip in 2016. The decline in share price and P/S ratio in 2015 appears to be a corrective phase, with subsequent recovery indicating improved investor sentiment. Sales per share changes were less volatile than share price or valuation metrics, highlighting relative stability in underlying sales performance.

Share Price Trend

The share price exhibited an overall upward trajectory over the analyzed periods. Starting from $88.69 in 2012, it increased to $107.62 in 2013 and reached a peak of $112.18 in 2014. A decline was noted in 2015, with the price falling to $93.73. However, the share price rebounded in subsequent years, recording $102.49 in 2016 and reaching its highest value of $121.52 in 2017.

Book Value Per Share (BVPS) Trend

The BVPS showed a declining trend throughout the period, beginning at $22.13 in 2012, slightly increasing to $23.88 in 2013, then steadily decreasing from 2014 onward. By 2014, BVPS had dropped to $16.27, followed by $15.89 in 2015, $10.35 in 2016, and a slight recovery to $14.63 in 2017. The overall downward movement suggests a reduction in the net asset value per share over these years.

Price-to-Book Value (P/BV) Ratio Analysis

The P/BV ratio demonstrated an increasing trend with notable fluctuations. Beginning at 4.01 in 2012, it rose to 4.51 in 2013 and sharply increased to 6.9 in 2014. Although there was a minor dip to 5.9 in 2015, it surged to 9.9 in 2016 before slightly declining to 8.31 in 2017. This rising trend indicates that the market valuation grew significantly relative to the book value, reflecting investor optimism or potentially overvaluation.

Insights and Interpretation

The contrasting trends between the declining BVPS and generally increasing share price and P/BV ratio suggest that market perceptions of the company's value have strengthened despite diminishing net asset value per share. The market may be factoring in growth prospects, earnings potential, or intangible assets not fully captured by the book value. However, the elevated P/BV ratios, especially the peak in 2016, could also imply heightened market expectation that may not be fully supported by asset fundamentals. The slight recovery in BVPS and slight decrease in P/BV in 2017 might indicate some stabilization.