Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Digital television entertainment company DirecTV provides service to more than 35 million customers in the U.S. and Latin America. It has a market cap of $38-billion (U.S.).
DirecTV has grown earnings at a 37-per-cent pace over the long term (using an average of the 3-, 4-, and 5-year EPS growth rates), doubling the broadcast & cable TV industry average of 18 per cent.
Its growth rate and 14.5 P/E ratio make for a 0.39 PE-to-growth ratio, which the Peter Lynch model likes, and it has a 0-per-cent long term debt/equity ratio.
The company has good momentum (relative strength of 78 over past 12 months) but shares remain cheap (1.2 price/sales ratio), helping it earn strong interest from the James O'Shaughnessy-inspired growth model.
It has a stellar 83-per-cent return on capital (EBIT/ tangible capital employed), part of why the Joel Greenblatt-based model has strong interest, and it has a 15.7-per-cent earnings yield, another reason the Greenblatt model likes it.
DirecTV has averaged a 30-per-cent return on retained earnings (those not paid out as dividends) over the past decade, which the Warren Buffett model likes.
John Reese is long DTV.
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