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Saturday, August 15, 2015

STOCKS 101 | P/E Ratios by Industry (from PSE Data) - Middle of August 20

I used the Wall Street Journal online's data thinking that it's more updated than that seen on COL Financial, but I missed checking out on the more direct source of data for P/E ratios - the Philippine Stock Exchange, Inc.

That's why I've created another set of tables of P/E ratios by industry collated and provided by the online PSE portal, as of August 14, 2015, midway to AuGHOST month's end wherein investors may just continue their panic buying and selling.

Most P/E ratios are somewhat similar or near the values produced by The Wall Street Journal. I decided to give data from the PSE itself to achieve balance in reporting P/E ratios. Hope that from what you may have learned in my previous post, you now know a bit how to judge stocks based on P/E ratios.

1. Bank and Financials


Comparing the P/Es of companies in the financial sector, it can be deduced that UBP is cheaper compared to its peers. However, one has to note whether there's a current problem with UBP (probably in its books or loans) or whether investors aren't just as attracted to it as they are attracted to the banking giants BDO and BPI. Or whether UBP already released its earnings report and the higher earnings reported pushed down its P/E. Or other cases. So conduct due diligence; this advise also goes to decisions involving other stocks mentioned in this post.

 2. Commercial and Industrial


Election's fast approaching. Could it be the reason why ABS and GMA7 have relatively high P/E ratios? Or could it be because their earnings didn't meet expectations (if and when they already released their report)?

IMI, based on P/E, is pretty undervalued given the fact that it's operations are international; however, could this also be the reason why this stock is not priced the way it should be? Because the peso is weakening against the dollar?

PCOR, the smallest in the list of 30 blue chip companies, is on a negative P/E value. Recall that oil's price has been hardly managing to go up due to the unexpected surge in supplies internationally. EEI, on another note, is somewhat attractive, but what makes it not so catchy at all?

Again, research, research, research.

 3. Conglomerates


We see here FPH (First Philippine Holdings) which has stakes in power-generating companies EDC (Energy Dev't Corp) and FGEN (First Gen Corp) as an undervalued stock. Are there problems (impending loan payments? etc?) in it or is it just not spotted?

LTG (Lucio Tan Group) has a very high P/E ratio. I don't get it why, but pretty sure one has to view this stock's trajectory. Has its earnings been affected by the Sin Tax Bill? Is it on a rebound?

4. Consumer


One of the most priced sectors is the Consumer sector, wherein average P/E hovers near 25. Most Filipinos love anything locally produced, from JFC's chickenjoy to URC's junk foods, RFM's Selecta milk and EMP's brandy. And who wouldn't love to buy in air-conditioned markets like that of PGOLD and RRHI? As long as there is someone living, these companies will continue earning. But the sector's high value?

 5. Gaming


The gaming industry has lower average P/E compared to the other sectors possibly because of lower earnings reported (MCP took a loss) which lost investors' appetite and a government crackdown on corruption in China scaring gamers in Macau. What other factors may be attributed to this lower P/E despite casino operators getting huge revenues?

6. Mining, Power, Telecom


Businesses focusing on basic needs like texting, electricity, and internet may strive despite stiffer competition. GLO's Globe is overpriced probably because investors were upbeat when the company released it has been gobbling market share and continuously earning higher profit versus its rival PLDT in this telecom duopoly.

7. Property


The property sector has a mix of undervalued and overvalued stocks. There are certain factors that influence these ratios - investor confidence, earnings report, financial stability, market share, occupancy rate, margins, scandals, etc.

Notable companies with high investor confidence are market leaders ALI and SMPH.

Friday, August 14, 2015

STOCKS 101 | Mid-august Investment Guide featuring Current P/E Ratios by Industry

The Philippine stock market plunged -0.42% to 7,408.44 on the last day of week two of August - which some investors call AuGHOST month due to anticipated market selloff caused by investors who believe it's a bad month for equities. It's not only felt here in the Philippines, but also outside. In fact, USA Today has reported "why investors in the US expect 'August Angst' to come."

Local stocks reporters refer to the "ghost month" as a "period in the Lunar calendar when Chinese investors avoid making big-ticket investments or other big moves like getting married or moving to a new house". (Inquirer) Hence, it could mean that next week will be the actual beginning of this dreaded event. Still, the overlap of these periods might just mean one thing, stocks will possibly go down.

When most stocks turn red, it may mean stocks are being sold at discounted prices; however, it may also mean stocks are just adjusting from its overvalued prices. At such discounts, value investors hunt for good stocks to buy based on some metrics like price/earnings ratio (P/E), price-to-book ratio (P/B), debt-equity ratio, price/earnings to growth ratio (PEG), earnings per share ratio (EPS), and free cash flow.

I talked about value investors. Who are they?

Investopedia defines it as:
Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the company's long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated. 
Typically, value investors select stocks with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields.

We are now wading through the middle of AuGHOST month. And depending on each own's appetite, we could either be buying discounted valuable stocks or selling under-performing stocks. 

Hence, to help you partly decide which stocks to look out for, I took the initiative to collect the current P/E ratios of all companies monitored by the COL Financial through its investment guide. I obtained all P/E data, as updated last August 14 (today), from The Wall Street Journal online.

(If you wish to skip this short refresher, please jump to the bottom of this page.)

But why P/E? What's with it?

The P/E ratio is a measure of how attractive a potential stock (company) is relative to its competitors. It divides the stock's share price by its earnings  (kita) per share which tell us how much investors are willing to shell out for a peso (1 Php) of earnings.

So, kung mataas ang P/E ratio, it may mean na:
  • With respect to the SHARE PRICE, in demand ang stock na ito for expected positive (good) results (usually higher profits and margins, lower expenditures, increased market share, removal of poorly performing CEO, acquisitions, etc), or
  • Hyped lang ang stock (probably because of maling akala or too much trust in the company) which means it was overvalued, which could lead to the consequence in the next bullet,
  • With respect to EARNINGS, mababa ang earnings kaya mataas ang P/E ratio or di mameet ng company ang earnings target, kaya ang result, some investors when they see na nag-exceed na sa ceiling P/E nila yung stock nila, they resort to selling.
Kung mababa naman ang P/E ratio, pwedeng:
  • With respect to the SHARE PRICE, di siya pinapansin ng mga investors kasi baka lubog sa utang or baka may mga bad news siya before (scandals, accidents, etc.) na hindi pa makalimutan ng mga investors 
  • With respect to the EARNINGS, surprising ang earnings ng company na na-exceed niya yung pace ng share price, which may possibly mean good to buy ang stock na ito. Example, stock A is trading with a P/E of 20 pero kanina lang nag-announce siya na nasurpass ng company yung earnings target, so automatically updated P/E for it would adjust to a lower than 20 kasi the denominator part of 20/1 (which is 1, may have increased to 1.2 or 1.4 or kahit ilan basta mataas). In this case, investors who spot stocks with low current P/E ratios and saw earnings to increase would usually buy these stocks.
Which leads me to these Tables of Updated P/E ratios of PSE companies by industry. Because we're in the middle of the selloff month, these tables may serve as guide in purchasing or selling stocks on the basis of the P/E ratio. 

Note, however, that due diligence must be practiced at all times when doing so...

....because a company's financials are not only measured by the P/E ratio. The P/E ratio has limitations and does not provide a complete insight for one to arrive at a decision. 

First, we can only compare P/E ratios of companies belonging in the same industry. Why? Because a mining company relying on mineral exports has a different way of earning versus a telecom company relying on broadband and landline subscriptions. We can't just assume their P/Es are comparable. 

Another important limitation is that the P/E ratio heavily depends on data provided by the companies themselves which may be prone to manipulation. The share price is highly dictated by the market; but, a company may choose not to disclose its poor earnings in an AuGHOST month for fear of investor panic or may do so para bara-bara na bagsak. There are many scenarios associated with P/E ratios, hence it's powerful, but just like any data, if COL Financial or any stock broker fails to update earnings info released by companies, the P/E ratios provided may seem unconvincing (kaya I made it a point to put in updated data as of August 14, 'cause I know some investors use P/E ratios as bases and it's a MEGA SALEEEEEE! Hehe!). This, however, urged me to make another post showing P/E ratios by industry but as provided by our very own Philippine Stock Exchange, Inc. to give you a balanced approach - one from foreign analyses, another from our very own exchange. You might notice that there may be some differences in the P/E ratios, which explains P/E ratio's limitations.

Lastly, P/E ratio is limited in that the companies with higher debt may be unattractive to investors, thus sometimes getting lower P/E. However, when the business is humahataw, the company with higher debt (lower P/E) may actually have won the industry over with more earnings as it took higher risks (probably due to speedy expansion and good fiscal management) which gave it higher returns. So, it's best to conduct wise judgment by studying the other basic metrics in investing. 

Now that you've learned a bit about one financial ratio which may serve important in arriving at a good investment decision, do take a look at the current mid-August P/E ratios per industry. I didn't add all companies listed in the PSE as I only chose what were highlighted by COL Financial in its own Investment Guide. Caveat!

1. BANKS AND FINANCIAL


Side Note:
(from Sir Mark Mataranas, Investment in the Philippines Market - Tips and Tricks)
For BANKS: 
Banks' balance sheets consist mostly of financial assets with varying degrees of liquidity, reason book value is a good proxy for the value of a banking stock. Assuming the assets and liabilities closely approximate their reported value, the base value for a bank should be book value. For any premium above that, investors are paying for future growth and excess earnings. Seldom do banks trade for less than book, but if they do, the bank’s assets could be distressed. Typically, big banks have traded in the two or three times book range over recently.. 
That's why comparing similar banks on a price-to-book (P/B) measure can be a good way to make sure you’re not overpaying for a bank stock. 
Of course there are other important factors/valuation to consider for banks like...
- ROE/ROA (kind of de facto standards for gauging bank profitability)
- net interest margin (looks at net interest income as a percentage of average earning assets. Virtually all banks report net interest margins because it measures lending profitability. You’ll see a wide variety of net interest margins depending on the type of lending a bank engages in, but most banks’ margins fall into the 3 percent to 4 percent range..
- Efficiency ratio (measures non-interest expense, or operating costs as a percentage of net revenues. Basically, it tells you how efficiently the bank is managed.)
- strong equity base (simplest metric to check is equity-to-asset ratio) and the ability to grow revenues at a steady pace.
- there are some more kaya P/E alone is less significant for banks. 
For banks, doing relative valuation with P/BV is a reasonable approximation of the value of the business compared to other industry..it's a good starting point for seeking out quality bank stocks. A solid bank trading at less than 2x BV is often worth a closer look..but there are banks that can trade above 2 or 3 like the big 3s (BPI/MBT/BDO usually commands above 2x BV..lower than that may mean a potential big bargain). This ratio is also a good approximation that you are not overpaying for a bank stocks.

Check for consistent solid ROE..also, not to low ROE (or too high ROE) from avg is good starting point. Above avg is good. 
There are other relevant data to check for detailed analysis but ROE & P/BV are a good starting point.

2. COMMERCIAL AND INDUSTRIAL



3. CONGLOMERATES



4. CONSUMER



5. GAMING



6. MINING, POWER, TELECOMS



7. PROPERTY



Disclaimer: 

I don't declare myself a stock market analyst nor do I believe that I am a mentor when it comes to stock investing. I am just a learning student trying to help in the best way I can, so that anyone can understand why some stocks perform greatly while others lag behind. I really wish you learned something from this post po. If you enjoyed this post, I would really appreciate it po if you like my humble blog hehe.




ENTERTAINMENT | Robin and Mariel lose triplets

Video Courtesy:  Youtube user Robin Padilla

Image Courtesy: Instagram user johnpagadu

Such a saddening news. I wish it weren't real. My heart goes to Mariel and Robin.

Thursday, August 13, 2015

SPORTS | Manny Pacquiao's list of top 5 boxers of all time

In response to undefeated five-division world boxing champ Floyd Mayweather Jr's list of Top 5 boxers, his Filipino rival Manny Pacquiao produced a list of his best five boxers of all time. Who were included in Pacquiao's list of favorite boxers?

1. Muhamad Ali

Image Source: Open In Ground

American boxing legend Muhammad Ali is among the greatest heavyweights in the sport's history

2. Julio Cesar Chavez 

Image Source; The Boxing Tribune

Julio Cesar Chavez is considered by acclamation as the greatest Mexican fighter of all time and as one of the best boxers of all time.

3. George Foreman 

Image Souce: Bloomberg

Nicknamed "Big George", George Foreman was a two-time world heavyweight champion and Olympic gold medalist. Currently, he's a pastor at a Houston church. 

4. Evader Holyfield 

Image Source: Totally History

Evader Holyfield  is a former Undisputed World Champion in both the cruiserweight and heavyweight divisions, earning him the nickname "The Real Deal."

5. Oscar De La Hoya

Oscar De La Hoya, Feb 2011.jpg
Image Source: Wikipedia

Nicknamed "The Golden Boy", De La Hoya has defeated 17 world champions and has won ten world titles in six different weight classes. He founded Golden Boy Promotions, a combat sport promotional firm. 

Pacquiao refused to include himself in his list as he believes boxing fans have their choices as well. “Hayaan na natin ang next generation na maglagay sa atin diyan,” he told ABS-CBN News' Jay Dayupay.

Boxer Information Courtesy: Wikipedia
With Additional Information: ABS-CBN News

Tuesday, August 11, 2015

ENTERTAINMENT | 'Fashion Pulis' blogger Michael Sy Lim arrested over Deniece Cornejo libel charges

Blogger Michael Sy Lim of popular gossip and entertainment blog “Fashion Pulis” was arrested on Tuesday over a libel complaint filed by Deniece Cornejo's camp.

Lim was arrested at around 11:30 a.m. by elements of Women and Children Protection unit on L.P. Leviste Street at Barangay (village) Bel-Air in Makati City, Police chief inspector Elizabeth Jasmin said.f

“He was arrested by virtue of warrant of arrest issued by Hon. Marie Claire Victoria Mabutas-Sordan, RTC Branch 95, Antipolo City under CC 15-50252 for violation of Sec. 4 (c4) of RA 10175 (libel) with Php16, 000. Bail recommended,” Jasmin said in a police report.

“The arrest was conducted in response to the request of Ms. Deniece Cornejo and Atty. Ferdinand Topacio as part of the CIDG Quality Assurance Support to Victims program,” it added.

Fashion Pulis tweeted Tuesday afternoon “Held in the CIDG office. Sad how people abuse libel to curtail press freedom.”

 It can be recalled that Cornejo accused TV host Vhong Navarro of raping her last year. Her petition for bail in reference to an illegal detention case filed by Navarro was granted by a regional trial court.

Source: Inquirer

PINOY PRIDE | Filipino dance crews land 2nd, 3rd place in world hip hop competition

Hurray! We did it again!

Three PH dance crews took home silver and bronze medals in three divisions of the World Hip Hop International Dance Championship which was held at Viejas Arena in Aztec Bowl, San Diego State University in San Diego, California.

For the Varsity Division, Legit Status took home second place beating Japan's JB Star; however, it lost to the Land of the Rising Sun's Kana-Boon!

For the Adult Division, Romancon from the College of St. Benilde landed second place, while India's Kings United reached third. New Zealand's The Bradas brought home the bacon in this category.

Video  Courtesy: Youtube channel OfficialHHI

Popular Philippine crew A-Team, however, failed to defend its title against first-timer Lock’n’Lol from Korea; A-Team got silver in the Mega Crew Division. Former champ The Royal Family from New Zealand still made it to the top three.

Another Filipino team, the La Salle Dance Company-Street, reached the final round of the Mega Crew Division.



ENTERTAINMENT | Ella Cruz, Kiray Celis, Donnalyn Bartolome dance to 'Twerk It Like Miley' on GGV

The "Twerk It Like Miley" dance craze seems to have not met its doom. Admittedly, it's still quite popular among the younger generation. Actress Maja Salvador did manage to pull off a sexy version of the song.

However, upcoming teen sensation Ella Cruz made rounds in social networks when she released her own dance version of the smash hit. On Gandang Gabi Vice (GGV), a late night Sunday comedy show, Ella together with Kiray Celis and Donnalyn Bartolome showed their talents. Kiray did more than just dance; she made up for her comic personality.

Video Courtesy: Youtube channel ABS-CBN News

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