IT Service Companies Valuation comparison

With gradual US and Europe recovery, the most likely beneficiaries are global IT service companies and the stock of top 10 IT solution providers are already reflecting the optimism. Most of them are at 52 week high and are trading at the higher end of the last 5 years valuation range. 

However within IT space some companies, which have higher growth rates and superior return ratios, are commanding relatively much higher valuation than their peers. For instance TCS is trading at 27 times PE multiple vs it's closest comparative competitor Accenture which is trading at just 17 times based on trailing 12 months EPS. IBM the largest of the pack is trading at 12.4 times TTM EPS.

Tupperware Brands: Stock Analysis and Valuation

When my sister in law became Tupperware's member recently and shared some of the business dynamics, and internals of the company I got so thrilled that I immediately bought $200 worth of products and went on to search if it is listed on Indian bourses. I found it listed in U.S markets as TUP and already hitting 52 week high. 

What struck me most is the Return on Equity that company is generating which is north of 70%. Tupperware has huge potential in India and other emerging economies as their products have become quite affordable in these economies due to rising per capita income. 

Netflix Valuation Unsustainable

Netflix (NFLX) is one of the hottest stock on wall street these days and why not when it has gone up 5 times from it's low of $53 in one year. The stock closed at $261 on 22nd July with  52 week high low for the stock at $270.3 and $52.8 respectively. 

For the second quarter of current financial year Netflix reported $1.07 billion of revenue and an earnings per share of 49 cents. For the year 2013 the company is expected to report an EPS of around $2.0 on revenues of approximately $4.3 billion. 

McDonald Q2 2013 Result and Valuation Analysis

The Burger giant, McDonald (MCD) posted earnings of $1.38 per share, up from $1.32 a share in the year-earlier period. Revenue increased to $7.08 billion from $6.92 billion a year ago.

Domestic and total global sales rose by a percent, yet those gains were offset by relatively flat performance in Europe and Asia, Middle East and Africa.

The company is expected to report around $5.6 of EPS in 2013 and at $98 (Price as on 22nd July 2013) the stock is trading at a forward PE multiple of 17.5 times.

With Market value to sales ratio at more than 3.5 times and Price to Earnings growth ratio (PEG) at 1.8 times, the stock seems expensive at $98, however an attractive dividend yield of more than 3% should provide support to the stock below $90. McDonald has increased dividend at 15% CAGR in last 5 years.