Question:
Based on the income statement below (look at the price-to-earnings ratio) do you think it (your company) looks undervalued? Could that perception change if the economic climate changes? Do you believe your company's valuation is being impacted today if let's say, your company was only a regional player? What is the basis for your conclusion? (by the looks of the income statement.)
|
(US$ millions)
|
1999
|
2000
|
2001
|
2002
|
2003
|
|
Net Sales
|
135
|
149
|
157
|
181
|
200
|
|
Cost of Goods Sold
|
(64)
|
(66)
|
(69)
|
(74)
|
(80)
|
|
Gross Profit
|
71
|
83
|
88
|
107
|
120
|
|
Gross Margin
|
53%
|
56%
|
56%
|
59%
|
60%
|
|
Selling, General & Administrative
|
(30)
|
(33)
|
(36)
|
(39)
|
(41)
|
|
Depreciation
|
(5)
|
(6)
|
(7)
|
(8)
|
(9)
|
|
Operating Profit
|
36
|
44
|
45
|
60
|
70
|
|
Operating Margin
|
27%
|
30%
|
29%
|
33%
|
35%
|
|
Interest Expense
|
(2)
|
(3)
|
(3)
|
(4)
|
(4)
|
|
Income Taxes (@ 33%)
|
(13)
|
(16)
|
(16)
|
(21)
|
(24)
|
|
Net Income
|
21
|
25
|
26
|
35
|
42
|
|
Net Margin
|
16%
|
17%
|
17%
|
19%
|
21%
|
|
Selected Financial Measures
|
|
|
|
|
|
|
Gross Margin
|
53%
|
56%
|
56%
|
59%
|
60%
|
|
Operating Margin
|
27%
|
30%
|
29%
|
33%
|
35%
|
|
Net Margin
|
16%
|
17%
|
17%
|
19%
|
21%
|
|
Return on Assets
|
22%
|
24%
|
22%
|
27%
|
29%
|
|
Return on Equity
|
89%
|
88%
|
77%
|
92%
|
95%
|
|
Debt to Equity Ratio
|
1.67
|
1.45
|
1.26
|
1.18
|
1.07
|
|
Asset Turnover
|
1.39
|
1.39
|
1.34
|
1.41
|
1.42
|
|
Dividends per share
|
USD 0.50
|
USD 0.53
|
USD 0.60
|
USD 0.65
|
USD 0.71
|
|
Earning per share
|
USD 2.15
|
USD 2.43
|
USD 2.49
|
USD 3.35
|
USD 4.04
|
|
Price of stock to Earnings
|
6.99
|
7.00
|
7.22
|
7.16
|
7.18
|
|
Price of stock to Book Value
|
6 25
|
6.16
|
5.56
|
6.57
|
6.79
|