The
PRR is only a useful measure for companies which engage
in a substantial amount of research and development expenditure
every year. It can be a useful measure of value when companies
are making losses or insignificant profits. A low PRR can
indicate that a very substantial amount is being spent on
research in relation to the share price and that, in these
terms alone, the shares are a bargain.
The second and third columns have been devoted to PSR and
the trend of sales because the PRR and PSR often work in
conjunction with each other. The fourth and fifth columns
have been used for margins and the trend of margins and
the last two for PCF and prospective PER.
An important caveat on PRRs is that the allocation of research
expenditure can be somewhat arbitrary; different companies
may classify the same expenditure in different ways.
REFS is
a mine of invaluable information for the private investor.
