Principal Financial Group is suitable for the Enterprising Investor as the company passes all of the investor type’s requirements, but is not suitable for the Defensive Investor as it has shown insufficient growth in earnings over the last ten years.
Archives for July 2014
Northrop Grumman qualifies for Enterprising Investors but not for Defensive Investors. The Defensive Investor has concerns regarding the low current ratio and the lack of earnings stability over the last ten years, but the Enterprising Investor’s only concern is the high level of debt relative to the net current assets.
I’ve selected the five lowest PEmg (price / normalized earnings) companies reviewed by ModernGraham. Each company has been determined to be suitable for the Enterprising Investor according to the ModernGraham approach. Here is a summary of each company’s valuation.
Mead Johnson is suitable for Enterprising Investors but not for Defensive Investors. The Defensive Investor is concerned with the low current ratio, poor earnings stability over the last ten years, short dividend history and the high PEmg and PB ratios.
Mattel qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor’s only initial concern is the high PB ratio, while the Enterprising Investor has no concerns.