Tabell’s Market Letter – February 04, 1949

TABELL'S MARKET LETTER )5 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 The table below lists the earnings, dividends and average price (the mean of the high and low) for the last twenty years on General Motors common stock. Also included is the price to earnings ratio and the yield, both based on the average price. This twenty year period in- cludes the top of the bull market of the twenties, the depression years, the boomlet of the thirties, the war years and three and a half years of peace. Thus, the period covers all phases of the economic cycle. At the 1948 average price of 57, General Motors was selling at eight times earnings. This is the lowest price to earnings ratio in twenty years. At the average price of 57, General Motors yielded 7.9 on the 1948 dividend payments of 4.50 per share. On only three occasions in the past was this yield surpassed. On one of these occasions, in 1931, the dividend was paid out of surplus. In the other two cases, in 1940 and 1941, the divideds ere barely covered. In 1948, only 50 of earnings were paid out in dividends. 1948 1947 10 46 1l45 1944 1943 1942 1941 1940 1939 1938 1937 1936 1935 1934 1933 1932 1931 1930 1929 Earnings 9.00 E 6.25 1.76 4.07 3.68 3.19 3.55 4.45 4.32 4.00 2.17 4.39 5.35 3.70 2.00 1.73 d. .21 2.01 3.25 5.49 Aver.Price 57 60 64 70 58 7/8 50 37 1/4 38 1/2 47 46 1/2 39 3/4 49 1/2 65 1/2 43 33 1/2 22 7/8 16 1/8 34 5/8 42 7/8 62 S/8 Price Earn. 8.0 9.6 36.3 17.1 16.0 15.6 10.4 8.6 10.8 11.6 1(3.3 11.2 12.2 11.6 16.6 13.2 17.2 13 .2 1.4 Dividend 4.50 3.00 2.25 3.00 3.00 2.00 2.00 3.75 3.75 3.50 1.50 3.75 4.50 2.25 1.50 1.25 1.25 3.00 3.00 3.60 Yield 7.9 5.0 3.5 4.3 5.1 4.0 5.4 9.8 8.0 7.5 3.8 7.6 6.9 5.2 4.5 5.5 8.7 7.0 5.7 E – estimated d – deficit At present prices, it is possible to purchase more earnings and dividends for each dollar paid for General lotors than at almost any tDne in the past twenty years. It would fle possible to use much more spectacular examples than General Motors. February 4, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum Is not to be construed illS ilIn offer or solicitation of offen to buy or sell any SClcurities From time to time W,sf' Homan &, Gftd.winbal have an Interest In lomll or all of the securities mentioned herein. The foregoing material has been pr.epared by, us as ,ill matter 0 norma IC! on y. d 1\ ul . upon information believed reli.sble but not neuss.srily complete, is not gUo!Iro!lnteed as accurate or final, o!Ind IS not Intended to foreclose mdepen ent I q ry