Common Stock Valuation Ratios (Price Multiples)
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
Time Warner Cable Inc., current price multiples
| Time Warner Cable Inc. | Alphabet Inc. | Comcast Corp. | Meta Platforms Inc. | Netflix Inc. | Walt Disney Co. | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||
| Current share price (P) | $210.79 | ||||||
| No. shares of common stock outstanding | 284,701,320 | ||||||
| Growth rate (g) | 14.54% | ||||||
| Earnings per share (EPS) | $6.48 | ||||||
| Next year expected EPS | $7.42 | ||||||
| Operating profit per share | $14.89 | ||||||
| Sales per share | $83.23 | ||||||
| Book value per share (BVPS) | $31.59 | ||||||
| Valuation Ratios (Price Multiples) | |||||||
| Price to earnings (P/E) | 32.54 | 26.21 | 4.43 | 25.58 | 24.52 | 16.32 | |
| Price to next year expected earnings | 28.41 | 20.48 | 3.98 | 20.19 | 18.65 | 16.05 | |
| Price-earnings-growth (PEG) | 2.24 | 0.94 | 0.39 | 0.96 | 0.78 | 9.91 | |
| Price to operating profit (P/OP) | 14.16 | 26.84 | 4.29 | 18.57 | 20.20 | 15.55 | |
| Price to sales (P/S) | 2.53 | 8.60 | 0.72 | 7.70 | 5.96 | 2.14 | |
| Price to book value (P/BV) | 6.67 | 8.34 | 0.91 | 7.12 | 10.11 | 1.84 | |
Based on: 10-K (reporting date: 2015-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Time Warner Cable Inc., historical price multiples
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
An analysis of the valuation multiples from 2011 to 2015 reveals a consistent expansion in market valuation across all measured metrics. Following a period of relative stability or slight contraction between 2011 and 2012, there is a marked upward trajectory in the premiums investors were willing to pay relative to earnings, operating profit, sales, and book value.
- Price to Earnings (P/E) Ratio
- The P/E ratio experienced significant growth, increasing from a low of 11.92 in 2012 to 28.42 by the end of 2015. This substantial rise suggests a heightened market expectation for future growth or an increase in the perceived quality of earnings over the period.
- Price to Operating Profit (P/OP) Ratio
- A parallel trend is observed in the P/OP ratio, which climbed from 5.78 in 2012 to 12.36 in 2015. The more than twofold increase in this multiple indicates that the market valuation grew at a pace significantly exceeding the growth of operating profits.
- Price to Sales (P/S) Ratio
- The P/S ratio remained stable between 2011 and 2012 before initiating a steady ascent, reaching 2.21 in 2015. This indicates that each dollar of revenue generated by the company was valued more highly by the market toward the end of the observed period.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio trended upward from 3.24 in 2011 to 5.83 in 2015. Despite a marginal dip in 2014 to 5.25, the overall increase reflects a growing divergence between the company's market capitalization and its net asset value.
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Price to Earnings (P/E)
Time Warner Cable Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 283,270,372 | 280,900,337 | 277,451,193 | 295,513,813 | 314,086,417 | |
| Selected Financial Data (US$) | ||||||
| Net income attributable to TWC shareholders (in millions) | 1,844) | 2,031) | 1,954) | 2,155) | 1,665) | |
| Earnings per share (EPS)2 | 6.51 | 7.23 | 7.04 | 7.29 | 5.30 | |
| Share price1, 3 | 184.99 | 149.74 | 144.98 | 86.94 | 77.66 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 28.42 | 20.71 | 20.59 | 11.92 | 14.65 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Data adjusted for splits and stock dividends.
2 2015 Calculation
EPS = Net income attributable to TWC shareholders ÷ No. shares of common stock outstanding
= 1,844,000,000 ÷ 283,270,372 = 6.51
3 Closing price as at the filing date of Time Warner Cable Inc. Annual Report.
4 2015 Calculation
P/E ratio = Share price ÷ EPS
= 184.99 ÷ 6.51 = 28.42
5 Click competitor name to see calculations.
Between 2011 and 2015, a distinct divergence occurred between the growth of the share price and the growth of earnings per share (EPS), resulting in a significant expansion of the price-to-earnings (P/E) multiple.
- Share Price Trends
- A continuous upward trajectory is observed in the share price, which rose from 77.66 US$ in 2011 to 184.99 US$ by 2015. The most pronounced acceleration occurred between 2012 and 2013, where the price increased from 86.94 US$ to 144.98 US$.
- Earnings per Share (EPS) Performance
- Earnings exhibited relative stability and lacked the aggressive growth observed in the share price. Following an initial increase from 5.30 US$ in 2011 to 7.29 US$ in 2012, the EPS remained largely flat, fluctuating between 7.04 US$ and 7.23 US$ through 2014, before experiencing a decline to 6.51 US$ in 2015.
- P/E Ratio Analysis
- The P/E ratio experienced a substantial overall increase, rising from 14.65 in 2011 to 28.42 in 2015. After a brief decline to 11.92 in 2012, the ratio jumped sharply to 20.59 in 2013. The expansion of this multiple in the final year is particularly notable as it reached its peak of 28.42 despite a simultaneous decrease in earnings per share, indicating that the market valuation increased independently of fundamental earnings growth.
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Price to Operating Profit (P/OP)
Time Warner Cable Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 283,270,372 | 280,900,337 | 277,451,193 | 295,513,813 | 314,086,417 | |
| Selected Financial Data (US$) | ||||||
| Operating income (in millions) | 4,239) | 4,632) | 4,580) | 4,445) | 4,069) | |
| Operating profit per share2 | 14.96 | 16.49 | 16.51 | 15.04 | 12.96 | |
| Share price1, 3 | 184.99 | 149.74 | 144.98 | 86.94 | 77.66 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 12.36 | 9.08 | 8.78 | 5.78 | 5.99 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Data adjusted for splits and stock dividends.
2 2015 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 4,239,000,000 ÷ 283,270,372 = 14.96
3 Closing price as at the filing date of Time Warner Cable Inc. Annual Report.
4 2015 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 184.99 ÷ 14.96 = 12.36
5 Click competitor name to see calculations.
Between 2011 and 2015, a pronounced divergence is observed between the market valuation and the operational profitability of the entity. While the share price exhibited a consistent and significant upward trend, operating profit per share reached a peak in 2013 before entering a period of stagnation and eventual decline.
- Share Price Performance
- The share price grew steadily from US$ 77.66 in 2011 to US$ 184.99 in 2015. The most substantial acceleration in value occurred between 2012 and 2013, when the price rose from US$ 86.94 to US$ 144.98, establishing a higher valuation baseline for the subsequent years.
- Operating Profit per Share Trends
- Operating profit per share increased from US$ 12.96 in 2011 to a maximum of US$ 16.51 in 2013. Following this peak, profitability remained flat in 2014 at US$ 16.49 and declined to US$ 14.96 by December 31, 2015, representing a reversal of the initial growth trend.
- Price to Operating Profit (P/OP) Ratio Analysis
- The P/OP ratio expanded from 5.99 in 2011 to 12.36 in 2015. This expansion indicates a significant increase in the multiple that the market was willing to pay relative to operating earnings. A critical observation is noted in 2015, where the P/OP ratio reached its five-year high of 12.36 despite a decrease in operating profit per share, suggesting that the valuation increase was driven by market sentiment or external expectations rather than improved operational performance.
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Price to Sales (P/S)
Time Warner Cable Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 283,270,372 | 280,900,337 | 277,451,193 | 295,513,813 | 314,086,417 | |
| Selected Financial Data (US$) | ||||||
| Revenue (in millions) | 23,697) | 22,812) | 22,120) | 21,386) | 19,675) | |
| Sales per share2 | 83.66 | 81.21 | 79.73 | 72.37 | 62.64 | |
| Share price1, 3 | 184.99 | 149.74 | 144.98 | 86.94 | 77.66 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 2.21 | 1.84 | 1.82 | 1.20 | 1.24 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Data adjusted for splits and stock dividends.
2 2015 Calculation
Sales per share = Revenue ÷ No. shares of common stock outstanding
= 23,697,000,000 ÷ 283,270,372 = 83.66
3 Closing price as at the filing date of Time Warner Cable Inc. Annual Report.
4 2015 Calculation
P/S ratio = Share price ÷ Sales per share
= 184.99 ÷ 83.66 = 2.21
5 Click competitor name to see calculations.
Between 2011 and 2015, the common stock valuation ratios exhibited a significant upward trajectory, characterized by a substantial expansion in the market premium relative to revenue.
- Share Price Performance
- The share price demonstrated strong growth over the five-year period, increasing from 77.66 US$ in 2011 to 184.99 US$ by 2015. The most pronounced acceleration occurred between 2012 and 2013, during which the price rose from 86.94 US$ to 144.98 US$, marking a sharp increase in market valuation.
- Sales per Share Growth
- Sales per share showed a consistent and steady increase, rising from 62.64 US$ in 2011 to 83.66 US$ in 2015. This indicates a stable growth in revenue generation per share throughout the analyzed period.
- Price-to-Sales (P/S) Ratio Analysis
- The P/S ratio remained relatively flat between 2011 and 2012, moving from 1.24 to 1.20. Starting in 2013, however, the ratio entered a period of expansion, climbing to 1.82 and reaching 2.21 by 2015. This expansion indicates that the share price grew at a significantly faster rate than the sales per share, suggesting that investors were willing to pay a higher multiple for each dollar of revenue as time progressed.
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Price to Book Value (P/BV)
Time Warner Cable Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 283,270,372 | 280,900,337 | 277,451,193 | 295,513,813 | 314,086,417 | |
| Selected Financial Data (US$) | ||||||
| Total TWC shareholders’ equity (in millions) | 8,995) | 8,013) | 6,943) | 7,279) | 7,530) | |
| Book value per share (BVPS)2 | 31.75 | 28.53 | 25.02 | 24.63 | 23.97 | |
| Share price1, 3 | 184.99 | 149.74 | 144.98 | 86.94 | 77.66 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 5.83 | 5.25 | 5.79 | 3.53 | 3.24 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Data adjusted for splits and stock dividends.
2 2015 Calculation
BVPS = Total TWC shareholders’ equity ÷ No. shares of common stock outstanding
= 8,995,000,000 ÷ 283,270,372 = 31.75
3 Closing price as at the filing date of Time Warner Cable Inc. Annual Report.
4 2015 Calculation
P/BV ratio = Share price ÷ BVPS
= 184.99 ÷ 31.75 = 5.83
5 Click competitor name to see calculations.
An analysis of the valuation metrics between 2011 and 2015 reveals a substantial expansion in the market valuation of the company relative to its accounting book value.
- Share Price Performance
- The share price exhibited a strong and consistent upward trajectory throughout the period, rising from 77.66 USD in 2011 to 184.99 USD by the end of 2015. This represents a significant increase in market capitalization over the five-year window.
- Book Value Per Share (BVPS) Growth
- The book value per share demonstrated steady but modest growth, increasing from 23.97 USD in 2011 to 31.75 USD in 2015. The growth rate of the BVPS remained positive each year, although it was significantly outpaced by the appreciation of the share price.
- Price to Book Value (P/BV) Ratio Analysis
- The P/BV ratio increased from 3.24 in 2011 to 5.83 in 2015. A notable surge occurred between 2012 and 2013, where the ratio jumped from 3.53 to 5.79. Following a slight correction to 5.25 in 2014, the ratio reached its period high of 5.83 in 2015.
The widening divergence between the share price and the book value indicates that the market is applying a higher premium to the company's assets over time. The transition from a P/BV of 3.24 to 5.83 suggests that investor confidence shifted toward valuing the company based on intangible assets, future growth prospects, or earnings potential rather than its liquidation value or tangible net assets.
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