Tobacco, a Killer Investment?

Definitions

Cash/Share: A measure of how much cash per share a company currently has.

Current: The Current Ratio is a measure of liquidity. You just take the Current Assets and divide by the Current Liabilities. Ideally, this is 1.0 or greater in financially strong companies.

DSO: Days Sales Outstanding measures the company's control on receivables. A company whose DSO is 50 takes 50 days to collect accounts receivable. Smaller numbers mean the company can use that money---a good thing. The figures herein use fiscal year receivable figures.

EV/SR: The Enterprise Value/Sales Ratio is a better indicator than the PSR of the true value of a company. Where the PSR uses the company's market cap for the numerator, EV/SR looks at the Enterprise value. Both ratios use the denominator of trailing revenues. To get the company's enterprise value take the market cap (share price times shares outstanding), add the long term debt, and then subtract the cash and cash equivalents.

GM: Gross margin, a measure of what percentage of each dollar of sales they get to keep after paying for the costs of manufacturing it.

Market Cap = Market Capitalization. This is the number of shares outstanding times the current share price. Essentially, this is what the company is currently on sale for -- or at least what someone who acquired the company would have to pay.

PEG: Price/Earnings Ratio over earnings per share (EPS) Growth Rate. This is a Foolish valuation that is also known as the Fool Ratio. It is detailed in our PEG area in Stock Research (Fool Main Screen --> Stock Research --> The Fool Ratio). Essentially, this is a short-hand for how underpriced or overpriced a stock is given the assumption that the Price/Earnings ratio should equal the rate of EPS growth.

P/E: The Price/Earnings Ratio, this essentially gives you a ratio of how much you are paying for a dollar of earnings, allowing you to compare a stock to its peers on an apples to apples basis.

PSR or P/S: The Price/Sales Ratio, this is derived from dividing the current market capitalization of the company by the last four quarters trailing revenues. This gives a guide to how a company is valued relative to its peers when it does not have earnings to currently compare.

PM: Profit margin, a measure of what percentage of each dollar of sales a company gets to keep after paying for everything.

RS: Relative Strength, a measure of how well the stock has performed relative to the market over the past two years. Scored on a scale of 1 to 99 with 99 being the best.

Surprise: This ratio represents the latest quarter's EPS divided by the EPS that had been estimated. So, a 6% surprise simply means that EPS were 6% greater than expectations.

WC/MC: Working capital is the difference between current assets and current liabilities. This is a measure of what percentage of the market cap is currently found in the working capital, signaling value.

(WC-I)/MMC: Working Capital minus the Inventory divided by the Modified Market Cap. (Modified Market Cap. is the Market Cap. plus the company's long-term debt.) This ratio measures the working capital that's not tied up in inventory relative to its current market value. This is a measure of the working capital that can be used to growing the business. The inventory is subtracted from the working capital because in this industry the liquidation value of the inventory is lower than what the FIFO or LIFO value would indicate.

YPEG: The Year-ahead PEG, this guy is also detailed in our PEG area in Stock Research (Fool Main Screen --> Stock Research --> The Fool Ratio). Essentially, this is a short-hand for how underpriced or overpriced a stock is given the assumption that the Price/Earnings ratio should equal the estimated long-term growth rate.e.

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