Feature Value Investing Weekly

40 Companies in the Spotlight This Week – 2/21/15

image (7)We evaluated 40 different companies this week to determine whether they are suitable for Defensive Investors, those unwilling to do substantial research, or Enterprising Investors, those who are willing to do such research. We also put each company through the ModernGraham valuation model based on Benjamin Graham’s value investing formulas in order to determine an intrinsic value for each. Here’s a summary of the ModernGraham Valuations. To see a listing and screenings of all the valuations, be sure to sign up to be a premium subscriber!

The Elite (Defensive or Enterprising and Undervalued)

Ameriprise Financial Inc. (AMP)

220px-Ameriprise_LogoAmeriprise Financial Inc. qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings stability over the last ten years along with the high PEmg and PB ratios, while the company passes all of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $2.77 in 2010 to $6.29 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 6.68% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.  (Read the full valuation)

FMC Technologies Inc. (FTI)

FTI Logo_277x38FMC Technologies is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, lack of dividends, and high PB ratio, while the Enterprising Investor is only concerned by the lack of dividends.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.39 in 2010 to $2.22 for 2014.  This level of demonstrated growth is greater than the market’s implied estimate of 5% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.  (Read the full valuation)

Hess Corporation (HES)

200px-Hess_Corporation_Logo.svgHess Corporation is suitable for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only concern is the low current ratio, so the Enterprising Investor is willing to overlook concerns with the level of debt relative to the current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $5.38 in 2010 to $8.75 for 2014.  This level of demonstrated growth is greater than the market’s implied estimate of only 0.14% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.  (Read the full valuation)

Lincoln National Corporation (LNC)

LfglogoLincoln National Corporation qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings stability or growth over the last ten years, while the company passes all of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $1.25 in 2010 to $4.25 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 2.67% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.  (Read the full valuation)

NetApp Inc. (NTAP)

126px-Netapp_logo.svgNetApp does fairly well in the ModernGraham model, and is suitable for Enterprising Investors. The Defensive Investor is concerned with the lack of dividend payments, along with the high PB ratio, while the Enterprising Investor has no initial concerns. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $1.09 in 2011 to an estimated $2.00 for 2015. This is a strong level of demonstrated growth, which is well above the market’s implied estimate of 5.2% annual earnings growth over the next 7-10 years. Here, the historical growth in EPSmg over the last five years is around 16.8% per year, which is clearly unsustainable over the long term. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur. Therefore, the model returns an estimate of intrinsic value well above the current price, indicating the company is significantly undervalued at the present time.  (Read the full valuation on Seeking Alpha)

People’s United Financial Inc. (PBCT)

PeoplesUnitedBankPeople’s United Financial Inc. qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the high PEmg ratio, while the company passes all of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $0.34 in 2010 to $0.71 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 6.23% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.  (Read the full valuation)

PNC Financial Services Group (PNC)

pnc_main_logoPNC Financial Services Group passes the initial requirements of the Enterprising Investor but not those of the more conservative Defensive Investor. The Defensive Investor is concerned by the low level of earnings growth over the last ten years, but the Enterprising Investor has a shorter horizon of only five years. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $4.73 in 2010 to $6.60 for 2014. This is a strong level of demonstrated growth, which is well above the market’s implied estimate for earnings growth of only 2.75% over the next 7-10 years. In fact, the historical growth is around 7.92% per year, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.  (Read the full valuation on Seeking Alpha)

Precision Castparts Corporation (PCP)

200px-Precision_Castparts_Corp_logo.svgPrecision Castparts Corporation is suitable for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only concern is the high PB ratio, while the Enterprising Investor has no initial concerns with the company.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $6.81 in 2011 to an estimated $11.01 for 2015.  This level of demonstrated growth is greater than the market’s implied estimate of 5.72% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.  (Read the full valuation)

Progressive Corporation (PGR)

220px-Progressive_Corporation.svgProgressive Corporation is suitable the Enterprising Investor but not the more conservative Defensive Investor, who has concerns regarding the lack of earnings stability or sufficient earnings growth over the last ten years, along with the inconsistent dividend record.  The Enterprising Investor, on the other hand, has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $1.30 in 2010 to $1.85 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 2.95% annual earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.  (Read the full valuation)

Travelers Companies Inc. (TRV)

500px-The_Travelers_Companies.svgTravelers Companies is suitable for both the Defensive Investor and the Enterprising Investor.  In fact, the company passes all of the requirements of both investor types, an impressive accomplishment.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $6.17 in 2010 to $8.31 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 2.24% annual earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.  (Read the full valuation)

Yahoo! Inc. (YHOO)

200px-Yahoo!_logo.svgYahoo Inc. passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The only issue for both investor types is the lack of dividends. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, Yahoo Inc. has grown its EPSmg (normalized earnings) from $0.57 in 2010 to $3.64 for 2014. This is a very strong level of demonstrated growth, which is well above the market’s implied estimate for earnings growth of only 1.73% over the next 7-10 years. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.  (Read the full valuation on Seeking Alpha)

The Good (Defensive or Enterprising and Fairly Valued)

Ace Limited (ACE)

Ace Limited is suitable for both the Defensive Investor and the Enterprising Investor.  In fact, the company passes all of the requirements of both investor types, an impressive accomplishment.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears fairly valued after growing its EPSmg (normalized earnings) from $7.23 in 2010 to $8.51 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 2.45% annual earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the market price.  (Read the full valuation)

BB&T Corporation (BBT)

BB&T Corporation qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings growth over the last ten years, while the company passes all of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears fairly valued after growing its EPSmg (normalized earnings) from $1.84 in 2010 to $2.36 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 3.89% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the market price.  (Read the full valuation)

Boeing Company (BA)

Boeing Company should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios, while the Enterprising Investor is only concerned by the low current ratio. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $3.60 in 2010 to $6.08 for 2014. This is a strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 8.39% over the next 7-10 years. The ModernGraham valuation model, therefore, returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.  (Read the full valuation on Seeking Alpha)

Danaher Corporation (DHR)

Danaher Corporation should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.13 in 2010 to $3.49 for 2014. This is a strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 8.2% over the next 7-10 years. The ModernGraham valuation model, therefore, returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.  (Read the full valuation on Seeking Alpha)

Eaton Corporation PLC (ETN)

Eaton Corporation PLC is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio along with the low level of earnings growth over the last ten years, while the Enterprising Investor is concerned by the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.51 in 2010 to $3.69 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 5.58% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.  (Read the full valuation)

E. I. Du Pont de Nemours and Co. (DD)

E. I. Du Pont De Nemours should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio and the high PB ratio, while the Enterprising Investor has no initial concerns. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.70 in 2010 to $3.99 for 2014. This is a strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 5.3% over the next 7-10 years. The ModernGraham valuation model, therefore, returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.  (Read the full valuation on Seeking Alpha)

Flowserve Corporation (FLS)

Flowserve Corporation is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, short dividend record, and the high PB ratio, while the Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.20 in 2010 to $3.22 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 5.45% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.  (Read the full valuation)

Principal Financial Group Inc. (PFG)

Principal Financial Group Inc. is suitable for the Enterprising Investor, but not the Defensive Investor, who is concerned by the low level of earnings growth over the last ten years.  The less conservative Enterprising Investor looks at a shorter horizon and has no initial concerns.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears fairly valued after growing its EPSmg (normalized earnings) from $2.16 in 2010 to $2.91 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 4.62% annual earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the market price.  (Read the full valuation)

Textron Inc. (TXT)

Textron Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, insufficient earnings growth or stability over the last ten years, and the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.08 in 2010 to $1.70 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 8.92% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.  (Read the full valuation)

The Mediocre (Defensive or Enterprising and Overvalued)

Autodesk Inc. (ADSK)

Autodesk Inc. is suitable for the Enterprising Investor, but not the more conservative Defensive Investor, who is concerned with the lack of dividends, insufficient earnings growth over the last ten years, as well as the high PEmg and PB ratios. The Enterprising Investor, on the other hand, is only concerned by the lack of dividends. As a result, the Enterprising Investor should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $0.80 in 2011 to only an estimated $1.09 for 2015. This demonstrated growth does not support the market’s implied estimate of 23.67%. In fact, historically demonstrated growth has been only 7.1%. As a result, the ModernGraham valuation model returns an estimate of intrinsic value below the market price at this time, and the company appears to be overvalued by the market.  (Read the full valuation on Seeking Alpha)

Chipotle Mexican Grill Inc. (CMG)

Chipotle Mexican Grill is suitable for the Enterprising Investor but not the Defensive Investor, who is concerned with the lack of dividend payments and the high PEmg and PB ratios. The Enterprising Investor, on the other hand, is only initially concerned by the lack of dividends. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $3.77 in 2010 to $10.53 for 2014. This is a very strong level of demonstrated growth but no growth that high is sustainable. Historical growth is actually around 35.8%, and the market has priced in an expected decrease to only 27.8% but even that is not achievable over a 7-10 year period. As a result, the ModernGraham valuation model returns an estimate of intrinsic value falling below the current price, indicating the company is overvalued at the present time.  (Read the full valuation on Seeking Alpha)

Fidelity National Information Services (FIS)

Fidelity National Information Services is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, insufficient earnings growth over the last ten years, along with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.20 in 2010 to only $1.82 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 14% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

Nike Inc. (NKE)

Nike Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.90 in 2011 to an estimated $2.93 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 11.47% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

Unum Group (UNM)

Unum Group is suitable for both the Defensive Investor and the Enterprising Investor.  The company passes all of the initial requirements of both investor types, indicating the company is in a very strong financial position.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $2.25 in 2010 to $2.32 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 3.23% annual earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the market price.  (Read the full valuation)

Varian Medical Systems Inc. (VAR)

Varian Medical Systems Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the lack of dividends along with the high PEmg and PB ratios, while the Enterprising Investor is only initially concerned by the lack of dividends.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.82 in 2011 to an estimated $3.94 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 7.5% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.37 in 2011 to only an estimated $2.73 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 10.17% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

The Bad (Speculative and Undervalued or Fairly Valued)

CMS Energy Corporation (CMS)

CMS Energy Corporation is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, the insufficient earnings growth or stability over the last ten years, the short dividend record, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.75 in 2010 to $1.60 for 2014.  This level of demonstrated growth is greater than the market’s implied estimate of 6.6% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

Delta Air Lines Inc. (DAL)

After reviewing the data, it is clear that conservative value investors may wish to seek other opportunities. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the short dividend history, while the Enterprising Investor has concerns with the high level of debt relative to the current assets. As a result, both investor types would find the company to be too risky to proceed. That said, any investor willing to speculate about the future of the company may go ahead with the next step of the analysis, which is a determination of the company’s intrinsic value.

When calculating an estimate of intrinsic value, it is important to consider the historical earnings results, along with the market’s implied estimate for future growth. Here, the company has grown its EPSmg (normalized earnings) from a loss of $5.81 in 2010 to a gain of $3.96 for 2014. This level of demonstrated growth is very strong and significantly higher than the market’s implied estimate of only 1.47% annual earnings growth. As a result, the company appears to be significantly undervalued at the present time.  (Read the full valuation on Seeking Alpha)

H&R Block Inc. (HRB)

H&R Block Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, the insufficient earnings growth or stability over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $0.89 in 2011 to an estimated $1.51 for 2015.  This level of demonstrated growth supports the market’s implied estimate of 7.36% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.  (Read the full valuation)

Ryder System Inc. (R)

Ryder System Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.58 in 2010 to an estimated $3.98 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 7.54% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.  (Read the full valuation)

Zions Bancorporation (ZION)

Zions Bancorporation is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years along with the high PEmg ratio.  The Enterprising Investor is concerned with the lack of earnings stability over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $3.06 in 2010 to a gain of $1.13 for 2014.  This level of growth outpaces the market’s implied estimate of 7.51% growth, leading the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value well above the price.  (Read the full valuation)

The Ugly (Speculative and Overvalued)

Mr. Market

AT&T Inc. (T)

AT&T Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio and the insufficient earnings stability over the last ten years.  The Enterprising Investor is concerned by the level of debt relative to the current assets and the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $2.48 in 2010 to $1.86 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 5.04% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

ECOLAB Inc. (ECL)

ECOLAB Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the the low current ratio, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.89 in 2010 to only an estimated $3.10 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 13.92% annual earnings growth over the next 7-10 years, leading the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

General Growth Properties Inc. (GGP)

General Growth Properties Inc. is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, lack of earnings stability or growth over the last ten years, and the inconsistent dividend record.  The Enterprising Investor is concerned with the high level of debt relative to the current assets and the lack of earnings stability.  As a result, value investors following the ModernGraham approach should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued despite growing its EPSmg (normalized earnings) from a loss of $1.95 in 2010 to only a loss of $0.05 in 2014.  Due to the negative EPSmg, the company receives a poor valuation out of the ModernGraham model, as one of the most important things is for a company to not lose money, which this company has done over the long-term this company.  As a result, the company is considered to be overvalued at this time.  (Read the full valuation)

Proctor & Gamble (PG)

Procter & Gamble does not qualify for either the Defensive Investor or the Enterprising Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and high PEmg and PB ratios. The Enterprising Investor takes issue with the level of debt relative to the current assets along with the lack of earnings growth over the last five years. As a result, any purchase of the company is made with a speculative nature behind it. That said, any speculator interested in pursuing the company should still proceed to the next part of the analysis, which is a determination of the company’s intrinsic value.

With regard to that intrinsic value, the company has seen its EPSmg (normalized earnings) drop from $3.95 in 2011 to only an estimated $3.89 for 2015. This lack of demonstrated growth does not support the market’s implied estimate for earnings growth of 6.78% annually over the next 7-10 years. The ModernGraham valuation model therefore returns an estimate of intrinsic value below the current price, indicating the company is overvalued at the present time.  (Read the full valuation on Seeking Alpha)

QEP Resources Inc. (QEP)

QEP Resources Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, the insufficient earnings stability or growth over the last ten years, and the short dividend record.  The Enterprising Investor is concerned by the level of debt relative to the current assets and the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $2.03 in 2010 to only an estimated $1.14 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 5.68% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

Starbucks Corporation (SBUX)

Starbucks Corporation is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, the short dividend record, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.09 in 2011 to only an estimated $2.10 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 17.54% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

St. Jude Medical Inc. (STJ)

St. Jude Medical Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the the low current ratio, short dividend history, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.03 in 2010 to $2.81 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 7.7% earnings growth over the next 7-10 years, leading the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

United States Steel Corporation (X)

United States Steel Corporation is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings growth or stability over the last ten years, the low current ratio, and the poor PEmg.  The Enterprising Investor is concerned by the lack of earnings growth or stability over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued due to the negative normalized earnings (EPSmg).  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.  (Read the full valuation)

Disclaimer: The author did not hold a position in any of the companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours. Logos taken from either the company website or Wikipedia; this article is not affiliated with the companies in any manner.

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