Feature Value Investing Weekly

28 Companies in the Spotlight This Week – 2/28/15

image (7)We evaluated 28 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)

CA Inc. (CA)

500px-CA_Technologies_brand.svgCA passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The only issue the Defensive Investor has with the company is the low current ratio. The Enterprising Investor is concerned with the level of debt relative to the current assets, but is willing to overlook those concerns since the company qualifies for the more conservative Defensive Investor. 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, CA has grown its EPSmg (normalized earnings) from $1.33 in 2011 to an estimated $2.13 for 2015. This is a very strong level of demonstrated growth, which is well above the market’s implied estimate for earnings growth of only 3.44% over the next 7-10 years. In fact, the historical growth is around 12.1% 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)

Chevron Corporation (CVX)

Chevron passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The only issue the Defensive Investor has with the company is the low current ratio. The Enterprising Investor is concerned with the level of debt relative to the current assets, but is willing to overlook those concerns since the company qualifies for the more conservative Defensive Investor. 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, Chevron has grown its EPSmg (normalized earnings) from $8.58 in 2010 to $11.43 for 2014. This level of demonstrated growth is well above the market’s implied estimate for earnings growth of only 0.42% annually over the next 7-10 years. In fact, the historical growth is around 6.63% 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)

Dover Corporation (DOV)

Dover-co-logoDover Corporation passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The only issue the Defensive Investor has with the company is the low current ratio, while the Enterprising Investor is only initially concerned with the level of debt relative to the current assets. 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 $2.98 in 2010 to $4.83 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 3.35% over the next 7-10 years. In fact, the historical growth is around 12.39% 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)

Ford Motor Company (F)

500px-Ford_Motor_Company_Logo.svgFord Motor Company does fairly well in the ModernGraham model, and is suitable for Enterprising Investors. The Defensive Investor is concerned with the inconsistent dividend history and lack of earnings stability over the last ten years, 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 a loss of $1.15 in 2010 to a gain of $1.79 for 2014. This is a strong level of demonstrated growth, which is well above the market’s implied estimate of only 0.33% annual earnings growth 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 estimates a growth figure much higher than the market’s implied rate. 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)

Franklin Resources Inc. (BEN)

Franklin_Resources_LogoFranklin Resources Inc. is suitable for both the Defensive Investor and the Enterprising Investor.  In fact, the company passes all of the requirements of both investor types, which is a rare accomplishment and demonstrates the strength of the company’s financials.  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 $2.23 in 2011 to an estimated $3.42 for 2015.  This level of demonstrated growth is greater than the market’s implied estimate of 3.73% 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)

Intel Corporation (INTC)

500px-Intel-logo.svgIntel Corporation passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The only issue the Defensive Investor has with the company is the low current ratio, while the Enterprising Investor has no initial concerns. 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, Intel Corporation has grown its EPSmg (normalized earnings) from $1.27 in 2010 to $2.15 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 3.74% over the next 7-10 years. In fact, the historical growth is around 13.79% 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)

JPMorgan Chase (JPM)

JPMorgan Chase passes all of the initial requirements of both the Defensive Investor and the Enterprising Investor, which is a rare accomplishment indicative of the company’s strong financial position. 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 $3.05 in 2010 to $4.82 for 2014. This is a strong level of demonstrated growth, which is well above the market’s implied estimate for earnings growth of only 2.13% over the next 7-10 years. In fact, the historical growth is around 11.64% 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)

KeyCorp (KEY)

KeyBankKeyCorp qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the lack of 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 a loss of $0.67 in 2010 to a gain of $0.91 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 3.44% 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)

Macerich Company (MAC)

500px-Macerich.svgMacerich Company is a rare REIT which qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor has only one concern, which is regarding the low current ratio, and since the company qualifies for the more conservative Defensive Investor, the Enterprising Investor is willing to overlook concerns with the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach should feel comfortable proceeding with further research into the company.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.22 in 2010 to $4.96 in 2014.  This level of demonstrated growth is greater than the market’s implied estimate of 4.14% annual earnings growth over the next 7-10 yeas.  As a result, the ModernGraham valuation model returns an estimate of intrinsic value well above the current price.  (Read the full valuation)

MeadWestvaco Corporation (MWV)

MeadWestvaco_logoMeadWestvaco Corporation is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio and high PEmg and PB ratios, while the Enterprising Investor is only 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 undervalued after growing its EPSmg (normalized earnings) from $0.90 in 2010 to $2.22 for 2014.  This level of demonstrated growth is greater than the market’s implied estimate of 7.93% 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)

SanDisk Corporation (SNDK)

220px-SanDisk_Logo_2007.svgSanDisk 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 history, insufficient earnings 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 undervalued after growing its EPSmg (normalized earnings) from $0.71 in 2010 to $3.81 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 above the price.  (Read the full valuation)

Seagate Technology (STX)

Seagate Technology does fairly well in the ModernGraham model, and is suitable for Enterprising Investors. The Defensive Investor is concerned with the inconsistent dividend history, lack of earnings stability over the last ten years, and 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 $0.34 in 2011 to an estimated $4.68 for 2015. This is a strong level of demonstrated growth, which is well above the market’s implied estimate of only 2.27% annual earnings growth 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 estimates a growth figure much higher than the market’s implied rate. 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)

State Street Corporation (STT)

220px-State_Street_Corporation_logo.svgState Street Corporation qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the lack of earnings stability 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 $1.42 in 2010 to $4.35 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 4.68% 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)

The Good (Defensive or Enterprising and Fairly Valued)

L Brands Inc. (LB)

L Brands Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio and the high PEmg ratio, while the Enterprising Investor’s only initial concern is 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 $1.67 in 2011 to an estimated $2.96 for 2015.  This level of demonstrated growth supports the market’s implied estimate of 11.2% 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)

Visa Inc. (V)

Visa Inc. should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio, short history as a publicly traded company, 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 $3.49 in 2011 to an estimated $7.95 for 2015. This is a strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 12.93% 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)

The Mediocre (Defensive or Enterprising and Overvalued)

Akamai Technologies Inc. (AKAM)

Akamai is suitable for the Enterprising Investor, but not the more conservative Defensive Investor, who is concerned with the lack of dividends, 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 $0.76 in 2010 to only $1.47 for 2014. This demonstrated growth does not support the market’s implied estimate of 19.61%. 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)

Baker Hughes Inc. (BHI)

Baker Hughes Inc. is suitable for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only concern is the insufficient earnings growth over the last ten years, 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 overvalued after growing its EPSmg (normalized earnings) from $3.22 in 2010 to $3.23 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 5.59% 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)

Broadcom Corporation (BRCM)

Broadcom Corporation is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the short dividend history along with 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 $0.87 in 2010 to only $1.16 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 15.05% 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)

Celgene Corporation (CELG)

Celgene is suitable for the Enterprising Investor, but not the more conservative Defensive Investor, who is concerned with the lack of dividends, lack of earnings stability 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 $0.23 in 2010 to $1.83 for 2015. This demonstrated growth is very strong but does not support the market’s implied estimate of 29.37% annual earnings growth over the next 7-10 years. The ModernGraham valuation model operates under the assumption that no company can sustain such a high level of growth over the long term and therefore returns an estimate of intrinsic value below the market price at this time, leading to the conclusion that the company is overvalued by the market.  (Read the full valuation on Seeking Alpha)

Facebook Inc. (FB)

Facebook is suitable for the Enterprising Investor, but not the more conservative Defensive Investor, who is concerned with the lack of dividends, short operating history as a publicly traded company, 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 $0.11 in 2010 to $0.61 for 2015. This demonstrated growth does not support the market’s implied estimate of 60.51% annual earnings growth over the next 7-10 years. The ModernGraham valuation model operates under the assumption that no company can sustain such a high level of growth over the long term and therefore returns an estimate of intrinsic value below the market price at this time, leading to the conclusion that the company is overvalued by the market.  (Read the full valuation on Seeking Alpha)

Hasbro Inc. (HAS)

Hasbro 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 $2.32 in 2010 to only an estimated $2.73 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 7.09% 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)

International Flavors & Fragrances Inc. (IFF)

International Flavors & Fragrances 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 $2.86 in 2010 to only $4.10 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 10.53% 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)

Johnson & Johnson (JNJ)

Johnson & Johnson is suitable for the Enterprising Investor, but not the more conservative Defensive Investor, who is concerned with the insufficient earnings growth over the last ten years, as well as the high PEmg and PB ratios. The Enterprising Investor, on the other hand, has no initial concerns. 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 $4.41 in 2010 to only an estimated $4.74 for 2014. This demonstrated growth does not support the market’s implied estimate of 6.6%. In fact, historically demonstrated growth has been only 1.47% per year. 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)

Tripadvisor Inc. (TRIP)

Tripadvisor Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the short operating history as a public company, the lack of dividends along with the high PEmg and PB ratios, 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 overvalued after growing its EPSmg (normalized earnings) from $0.55 in 2010 to only $1.42 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 27.11% 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)

No companies met these criteria this week.

The Ugly (Speculative and Overvalued)

Mr. Market

Diamond Offshore Drilling Inc. (DO)

Diamond Offshore Drilling 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 insufficient earnings growth over the last ten years.  The Enterprising Investor is concerned by the level of debt relative to the current assets along with 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 $7.97 in 2010 to only $4.41 for 2014.  This level of demonstrated lack of growth doesn’t even support the market’s implied estimate of a 0.95% annual earnings drop 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)

Johnson Controls Inc. (JCI)

Johnson Controls Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the 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 overvalued after growing its EPSmg (normalized earnings) from $1.44 in 2011 to only an estimated $2.31 for 2015.  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)

Nabors Industries Limited (NBR)

Nabors Industries is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the the low current ratio, the insufficient earnings growth or stability over the last ten years, and the short dividend history.  The Enterprising Investor is concerned by the level of debt relative to the net 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 $1.08 in 2010 to only an estimated $0.71 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 4.5% 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)

OneOK Inc. (OKE)

OneOK Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the 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 overvalued after growing its EPSmg (normalized earnings) from $1.47 in 2010 to only $1.50 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 10.36% 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)

 

Disclaimer: The author held a long position in Dover Corporation (DOV) and Ford Motor Company (F) but did not hold a position in any of the other 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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