Time Warner Cable Inc. (NYSE:TWC)

The analysis of valuation metrics from 2007 to 2016 reveals a distinct cycle of contraction and expansion in the Price to Sales (P/S) ratio, occurring alongside a consistent upward trajectory in revenue generation per share.

Price to Sales (P/S) Ratio Trends

A significant contraction in the P/S ratio occurred between 2007 and 2010, falling from a high of 3.40 to a period low of 0.93. This decline indicates a sharp reduction in the market's valuation of each dollar of sales. Following this trough, the ratio entered a phase of relative stability from 2011 to 2013, fluctuating between 1.20 and 1.31. A recovery phase emerged starting in 2014, with the ratio climbing steadily to reach 2.21 by 2016.

Revenue Performance per Share

Sales per share demonstrated consistent growth throughout the analyzed period, increasing from 36.14 in 2007 to 83.66 in 2016. The steady rise in sales per share suggests a robust capacity for revenue growth, which persisted even during periods of share price volatility.

Correlation Between Market Price and Valuation

The relationship between share price and sales per share highlights a notable divergence between 2007 and 2010. During this interval, the share price declined from 123.00 to 46.89 despite the increase in sales per share, leading to the observed compression of the P/S ratio. Conversely, the period from 2014 to 2016 was characterized by simultaneous growth in both share price and sales per share, which drove the P/S ratio from 1.82 to 2.21, reflecting an expansion in market valuation relative to revenue.