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I wrote this recently to find out what is KO worth using the venerable valuation ratios.

You can download the report here:


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Very well written note. Thank you!

Few comments:

1) According to the research done by O'Shaughnessy (sp?) in 'What works on Wall Street' low PSR screen has done well and he calls PSR the king of valuation ratios.

PSR is good not just for small and unprofitable companies but also for cyclicals - as you mentioned in your article, PE won't work here.

2) For highly leveraged companies, EV/Sales might do better as also EV/Ebit.
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Hi SIngaporesling,

Thanks for your comments. neber really had much luck with PSRs, whether as a replacement for magic formula or as an implementation of Jame's Cornerstone strategy. I wished my results were different :)

I like PSR for small caps, and as you pointed out this works for cyclicals as well. But I would caution that a company can't survive on PSR alone.

Agree with your EV/Sales portion


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