TELENOR ASA, ADR - EVALUATION

Telenor's stock emerged as an  ACE'S selection based on the evaluation results of the criteria listed below. The evaluation results are encapsulated as one value in ASG (short for ACE'S Stock Grade). ASG is a proprietary variable that was devised by ACE'S to measure the quality of a stock for investment. Telenor's ASG value of 45.95 is VERY GOOD.

A. MANAGEMENTS EFFECTIVENESS - POOR
B. PRODUCTS & SERVICES, SET OF - GOOD 
C. SALES -  EXCELLENT 
D. CASH FLOW, FREE - EXCELLENT
E. PROFITABILITY -   POOR
F. PRICE-EARNINGS RATIO (P/E) -  POOR
G. FINANCIAL HEALTH -   GOOD
H. MARKET CAPITALIZATION - AVERAGE
I. TRADED VOLUME -  POOR
J. PRICE GROWTH - EXCELLENT 

A. MANAGEMENTS EFFECTIVENESS - POOR

How well a company performs generally - in its business operations, controlling costs,  the success of its products and services in the market place, profitability, and the like - depends on its management's efficiency. Return on Equity ( ROE) is used by ACE'S as a general indication of the company's efficiency.

Telenor's ROE (ttm) of 24.4% is lower (by 12.80%) than the Industry's ROE of 28.0%; and higher (by 27.80%) than the S&P 500's ROE of 21.9%. (Ref.: MSN Finance\Key Ratios).

  ACE'S gives a preferential rating to a company that has a comparable or relatively higher ROE than the Industry. ACE'S rating of Telenor's Management's Effectiveness: POOR (LOWER THAN INDUSTRY'S AVERAGE).

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  ACE'S  gives a preferential rating to a company who have a variety of product and services  that have present and continued  utility in a broad and dynamic  market. An estimation of the latter products' utility, distinctive qualities and competitiveness would be subjective assessments. However, there is one objective data that indicates how well the subjective elements of Telenor's products and services are assessed and used by its target market - the company's sales.

 ACE'S rating of Telenor's line-up of Products & Services:  EXCELLENT

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C. SALES -   EXCELLENT 

Sales is an important indicator on how a company's products and services performs in its target market. Generally, a high sales figure is preferred than a lower figure. Also, a steady and appreciable growth in a company's total sales from one year to the next is a key indicator on how a company is able (or unable) to sustain and improve the utility of its products and services in the marketplace.

Telenor's annual revenue was $46,040.0M in 12/2001, $48,826.0M in 12/2002, $53,121.0 in 12/2003, $60,591.0M in 12/2004 and $68,927.0M in 12/2005. Relative to 12/2001's revenue, the Company's sales increased 6.00% in 2002; 15.30% in2003; 31.60% in 2004 and 49.70% in 2005, (Ref.: MSN Money\Financials).  Telenor's ttm annual sales of $14.09B was 133.04% higher than the Industry's  sales of $46.59M.  Telenor's ttm Sales growth rate of 38.20% was 24.50% points higher than the Industry's rate of 13.70%.   (Ref.: MSN Money\Research).

  ACE'S gives a preferential rating to a company that have demonstrated the ability to sustain an appreciable and progressively increasing level of sales  from year-to-year. Telenor's year-to-year annual revenues have progressively increased from 2001 to 2005.   ACE'S rating of Telenor's Sales Growth Rate: EXCELLENT.

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D. CASH FLOW, FREE - EXCELLENT

Cash flow is crucial to the operation and survival of companies. A company having ample ready cash ensures that creditors, employees, and others can be paid on time. Cash flow could be considered as a better measure of a business's profitability than earnings, because a company can show positive net earnings and have insufficient cash flow (that is, the company is not able to pay its debts). Cash Flow thus can be used as an indicator of a company's financial strength.

Telenor's cash flow (from operating activities) during the past 5 years: $6,993M in 12/2001; $12,858.0M in 12/2002; $13,676.0M in 12/2003; $18,991.0M in 12/2004; and $22,340M in 12/2005.  Relative to 12/2001, the Company's cash flow increased 83.80% in 2002, 95.50% in2003, 171.50% in 2004, and 219.40% in 2005. (Ref.: MSN Money\Financials).

 ACE'S gives a preferential rating to a company that have demonstrated the ability to sustain a positive and appreciable cash flow from year-to-year. Telenor's year-to-year cash flow have an average annual increase of 142.55% from 2001 to 2005.  ACE'S rating of Telenor's Cash Flow: EXCELLENT.

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E. PROFITABILITY -  POOR  

Making a profit is the ultimate goal of every company. A useful gauge of a company's profitability is its net income (also referred to as "earnings").  Related to a company's outstanding shares of common stocks, the company's total earnings is transformed to "earnings per share" (or "EPS" for short). EPS is a very popular indicator of a company's profitability and a powerful variable that influences the price of a company's stock.

Telenor's annual Net Income, for the past 12 months, of $1.83B is 47.10% less than the Industry's Income of $3.46B. In terms of growth, Telenor's income growth was 69.30% vis-a-vis the Industry's 5.50%. (Refs. MSN Money\Financials\Statements). For the past 5 years, Telenor's  annual Net Income are: $7,004.0M in 12/2001; -$3,658.0M in 12/2002; $5,036.0M in 12/2003; $5,639.00M in 12/2004; and $7,427.00M in 12/2005.  Relative to 12/2001, the Company's net income decreased 152.20% in 2002, 28.00% in2003, 19.40% in 2004 and increased 6.00% in 2005; or an average year-to-year increase of -48.40%. (Refs. MSN Money\Financials\Statements)

A stock's Price-Earnings ratio tells us roughly how much investors are willing to pay per dollar of earnings. Price-Earnings is a ratio of a company's current share price compared to its per-share earnings. The P/E ratio is a much better indicator of the value of a stock than the market price alone.

In general, a high P/E means high projected earnings in the future. As such, the P/E ratio could be interpreted as the reflection of the market's optimism concerning a firm's growth prospects. To determine whether a particular P/E is high or low, take into account a company's growth rates; and the P/Es of other companies in the same industry. Historically, the average P/E ratio in the market has been around 15-25.

Telenor has a P/E ratio of 17.46 (ttm) which is 1.48 points higher - or 9.20% more - than the Industry's P/E of 15.98 (ttm). (Ref.: Yahoo! Finance\Competitors)

G. FINANCIAL HEALTH -  GOOD (LOWER THAN INDUSTRY'S AVERAGE).

The assumption of debt, i.e., financial leverage, are used by companies to finance its assets. The magnitude of the debt's expense component affects the company's net income.

A company with significantly more debt than equity is considered to be highly leveraged. A popular measure of financial leverage is the "debt/equity ratio". A higher debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This higher ratio can result in volatile or negative earnings as a result of the additional interest expense. Thus, the Debt/Equity Ratio is popularly used as a measure of a company's financial health.

Telenor's 1.30 Debt/Equity Ratio (latest 12 months) is 0.51% points (or 28.10%) less than the Industry's Ratio of 1.81, and 0.03% points (or 2.3%) greater than the S&P 500's Ratio 1.27.  (Refs.: MSN Money\Ratios)

ACE'S gives a preferential rating to a company that has a comparable or relatively lower debt ratio than the Industry.  ACE'S rating of Telenor's  Debt Ratio: GOOD (LOWER THAN INDUSTRY'S AVERAGE).

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H. MARKET CAPITALIZATION -  AVERAGE  

Market Capitalization (or market cap for short) is a measure of a company's size. The market cap provides a broad gauge of the growth-versus-risk potential of a company. Historically, large caps have experienced slower growth with lower risk; whereas small caps have experienced higher growth potential, but with higher risk.

The market cap of a company is calculated by multiplying the number of its outstanding shares by the shares' current market price. There are presently six classes of Market Cap: Mega Cap, Big/Large Cap, Mid Cap, Small Cap, Micro Cap and Nano Cap. ACE'S assigns an Excellent rating to Small Cap stocks; Good to Mid Caps; Average to Big/Large Caps; and Below Average to Mega Caps.  ACE'S excludes Micro and Nano Caps in its stock picks.

Telenor is classified as a large cap growth company with a market capitalization of $32,188.37M and with outstanding shares of 560.09M. (Ref.: Reuters)

 ACE'S gives a preferential rating to small and mid cap companies.  ACE'S rating of Telenor's  Market Cap:  AVERAGE.

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I. TRADED VOLUME - POOR

A stock's price goes up or down based on the laws of supply and demand. Simply stated, when a stock's price goes up, there must be significant buying demand for the stock. Volume is the actual number of shares traded daily. Traded volume could be used as a gauge of the demand for a stock.

Telenor has an 3-month Average Daily Volume of 70,683.10 shares; and a 10-day Average Daily Volume of 88,766.70 shares.  (Refs.: Yahoo! Finance\Statistics).  ACE'S assigns an Excellent rating for +1,000,000 trading volumes; Good for 500,001-999,999 volumes; Average for 100,000 - 500,000 volumes; and Poor for -100,000 volumes.

 ACE'S gives a preferential rating to a company that sustains a lively trade volume from week-to-week and month-to-month.  ACE'S rating of Telenor's  Traded Volume: POOR.

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J. PRICE GROWTH - EXCELLENT  

Price growth  is the 12-month increase in the price of a stock (displayed as a percentage). As of 12/15/06, Telenor had a 3-month growth rate  of 46.90% (vs. the Industry's 21.60% rate), a 6-month rate of 63.50% (vs. the Industry's 29.70% rate), and  a 12-month rate of 91.20% (vs. the Industry's 30.40% rate).  (Refs.: MSN Money\Research).

ACE'S gives a preferential rating to a company that have demonstrated a solid capacity for high price growth and outperforming other stocks in the Industry.  ACE'S rating of Telenor's  Price Growth: EXCELLENT.

  Last modified: 04/30/08