Analog Devices Inc Valuation – March 2019 #ADI

Company Profile (excerpt from Reuters): Analog Devices, Inc. (Analog Devices), incorporated on January 18, 1965, designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing(DSP) technology, including integrated circuits (ICs), algorithms, software and subsystems. The Company provides Analog Products, such as Converters, Amplifiers/Radio Frequency, Other Analog, and Power Management and Reference. It also offers Digital Signal Processing Products (DSPs). The Company operates in the United States, Rest of North/South America, Europe, Japan and China.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADI – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $40,551,370,837 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.34 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.98% Pass
6. Moderate PEmg Ratio PEmg < 20 29.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.54 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.34 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.49 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.75
MG Growth Estimate 11.06%
MG Value $114.96
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $54.43
MG Value based on 0% Growth $31.91
Market Implied Growth Rate 10.41%
Current Price $110.06
% of Intrinsic Value 95.74%

Analog Devices, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.16 in 2015 to an estimated $3.75 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 10.41% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Analog Devices, Inc. revealed the company was trading above its Graham Number of $59.5. The company pays a dividend of $1.89 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 29.32, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.17.

Analog Devices, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.17
Graham Number $59.50
PEmg 29.32
Current Ratio 2.34
PB Ratio 3.54
Current Dividend $1.89
Dividend Yield 1.72%
Number of Consecutive Years of Dividend Growth 15

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Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $1,985,180,000
Total Current Liabilities $849,955,000
Long-Term Debt $6,234,517,000
Total Assets $21,828,278,000
Intangible Assets $16,885,588,000
Total Liabilities $10,242,841,000
Shares Outstanding (Diluted Average) 372,506,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.30
Oct2018 $3.97
Oct2017 $2.07
Oct2016 $2.76
Oct2015 $2.20
Oct2014 $1.98
Oct2013 $2.14
Oct2012 $2.13
Oct2011 $2.81
Oct2010 $2.33
Oct2009 $0.85
Oct2008 $2.67
Oct2007 $1.50
Oct2006 $1.48
Oct2005 $1.08
Oct2004 $1.45
Oct2003 $0.78
Oct2002 $0.28
Oct2001 $0.93
Oct2000 $1.59
Oct1999 $0.55

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.75
Oct2018 $2.85
Oct2017 $2.27
Oct2016 $2.33
Oct2015 $2.16
Oct2014 $2.19
Oct2013 $2.21
Oct2012 $2.22
Oct2011 $2.18
Oct2010 $1.84
Oct2009 $1.56
Oct2008 $1.83
Oct2007 $1.36
Oct2006 $1.19
Oct2005 $1.00
Oct2004 $0.98
Oct2003 $0.77

Recommended Reading:

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Analog Devices Inc Valuation – June 2018 $ADI
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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian Utilities Ltd Valuation – September 2018 $TSE:CU

Company Profile (excerpt from Reuters): Canadian Utilities Limited is a global enterprise company. Its segments include Electricity, Pipeline & Liquids, and Corporate & Other. Its Electricity segment’s activities are conducted through two regulated businesses; ATCO Electric Distribution and ATCO Electric Transmission, and three non-regulated businesses, ATCO Power, ATCO Power Australia and Alberta PowerLine (APL). The Pipelines & Liquids segment’s activities are conducted through three regulated businesses, ATCO Gas, ATCO Pipelines and ATCO Gas Australia, and one non-regulated business, ATCO Energy Solutions. It delivers natural gas distribution and transmission services, energy storage, and industrial water solutions to existing and new customers. The Corporate & Other segment includes retail energy business, which through ATCOenergy, sells electricity and natural gas to large commercial retail customers. It also includes the commercial real estate in Alberta, and the strategic investment and expansion into Mexico.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CU – September 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,697,840,205 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.10 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 7.85% Fail
6. Moderate PEmg Ratio PEmg < 20 17.27 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.36 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.10 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 87.75 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.84
MG Growth Estimate -2.18%
MG Value $7.60
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $26.66
MG Value based on 0% Growth $15.63
Market Implied Growth Rate 4.38%
Current Price $31.75
% of Intrinsic Value 417.51%

Canadian Utilities Limited Class A does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.15 in 2014 to an estimated $1.84 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.38% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Canadian Utilities Limited Class A revealed the company was trading above its Graham Number of $28.9. The company pays a dividend of $1.43 per share, for a yield of 4.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.27, which was below the industry average of 22.75, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-49.29.

Canadian Utilities Limited Class A scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$49.29
Graham Number $28.90
PEmg 17.27
Current Ratio 1.10
PB Ratio 1.36
Current Dividend $1.43
Dividend Yield 4.50%
Number of Consecutive Years of Dividend Growth 10

Useful Links:

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Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,181,000,000
Total Current Liabilities $1,070,000,000
Long-Term Debt $9,740,000,000
Total Assets $20,911,000,000
Intangible Assets $600,000,000
Total Liabilities $14,580,000,000
Shares Outstanding (Diluted Average) 271,818,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.10
Dec2017 $1.54
Dec2016 $2.06
Dec2015 $1.11
Dec2014 $2.52
Dec2013 $2.09
Dec2012 $2.02
Dec2011 $1.83
Dec2010 $1.61
Dec2009 $1.86
Dec2008 $1.65
Dec2007 $1.54
Dec2006 $1.28
Dec2005 $1.04
Dec2004 $1.22
Dec2003 $1.02
Dec2002 $1.20
Dec2001 $0.93
Dec2000 $0.90
Dec1999 $0.78
Dec1998 $0.75

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.84
Dec2017 $1.76
Dec2016 $1.90
Dec2015 $1.85
Dec2014 $2.15
Dec2013 $1.94
Dec2012 $1.84
Dec2011 $1.73
Dec2010 $1.65
Dec2009 $1.60
Dec2008 $1.43
Dec2007 $1.29
Dec2006 $1.16
Dec2005 $1.10
Dec2004 $1.10
Dec2003 $1.02
Dec2002 $0.98

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Canadian Utilities Ltd Valuation – Initial Coverage $TSE:CU

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A

Company Profile (excerpt from Reuters): Canadian Tire Corporation, Limited is a Canada-based company, which operates through a range of businesses. The Company’s segments include Retail, CT REIT and Financial Services. Its retail segment operates through its retail banners, including Canadian Tire, PartSource, Petroleum, Mark’s, and the various FGL Sports banners. CT REIT is engaged in owning, developing and leasing of income-producing commercial properties. It has a portfolio of properties, which consists of over 300 properties located across Canada totaling approximately 24.7 million square feet of gross leasable area. Financial Services markets a range of Canadian Tire-branded credit cards, including the Canadian Tire Options MasterCard, the Cash Advantage MasterCard and the Gas Advantage MasterCard. It also markets insurance and warranty products, processes credit card transactions for purchases made in Canadian Tire stores and Mark’s stores as well as at Petroleum outlets, and offers financing options.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CTC.A – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,951,365,292 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.82 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 104.14% Pass
6. Moderate PEmg Ratio PEmg < 20 16.40 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.12 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.82 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.87 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.08
MG Growth Estimate 7.51%
MG Value $236.97
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $146.11
MG Value based on 0% Growth $85.65
Market Implied Growth Rate 3.95%
Current Price $165.27
% of Intrinsic Value 69.74%

Canadian Tire Corporation Limited Class A qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.72 in 2014 to an estimated $10.08 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian Tire Corporation Limited Class A revealed the company was trading above its Graham Number of $134.18. The company pays a dividend of $2.6 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 16.4, which was below the industry average of 30.61, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.87.

Canadian Tire Corporation Limited Class A performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.87
Graham Number $134.18
PEmg 16.40
Current Ratio 1.82
PB Ratio 2.12
Current Dividend $2.60
Dividend Yield 1.57%
Number of Consecutive Years of Dividend Growth 7

 

Useful Links:

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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $8,394,800,000
Total Current Liabilities $4,608,100,000
Long-Term Debt $3,312,200,000
Total Assets $15,313,900,000
Intangible Assets $1,282,700,000
Total Liabilities $10,219,800,000
Shares Outstanding (Diluted Average) 65,489,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.20
Dec2017 $10.67
Dec2016 $9.22
Dec2015 $8.61
Dec2014 $7.59
Dec2013 $6.91
Dec2012 $6.10
Dec2011 $5.71
Dec2010 $5.42
Dec2009 $4.10
Dec2008 $4.60
Dec2007 $5.05
Dec2006 $4.31
Dec2005 $3.98
Dec2004 $3.53
Dec2003 $2.95
Dec2002 $2.53
Dec2001 $2.23
Dec2000 $1.89
Dec1999 $1.89
Dec1998 $2.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.08
Dec2017 $9.21
Dec2016 $8.22
Dec2015 $7.47
Dec2014 $6.72
Dec2013 $6.07
Dec2012 $5.49
Dec2011 $5.12
Dec2010 $4.78
Dec2009 $4.44
Dec2008 $4.51
Dec2007 $4.30
Dec2006 $3.77
Dec2005 $3.34
Dec2004 $2.89
Dec2003 $2.48
Dec2002 $2.21

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian Pacific Railway Ltd Valuation – August 2018 $TSE-CP

Company Profile (excerpt from Reuters): Canadian Pacific Railway Limited, incorporated on October 1, 2001, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States. The Company operates through rail transportation segment. The Company transports bulk commodities, merchandise freight, and intermodal traffic over a network of approximately 12,400 miles, serving the business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia and the United States Northeast and Midwest regions. Its railway feeds directly into the United States heartland from the east and west coasts. Its Bulk commodities include grain, coal, potash, fertilizers and sulfur. Its Merchandise freight consists of finished vehicles and machinery, as well as forest and industrial and consumer products. Its Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck. Its subsidiaries include Canadian Pacific Railway Company, Soo Line Railroad Company, Delaware and Hudson Railway Company, Inc., Dakota, Minnesota & Eastern Railroad Corporation and Mount Stephen Properties Inc.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CP – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $33,554,710,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.57 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 285.13% Pass
6. Moderate PEmg Ratio PEmg < 20 20.71 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.70 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.57 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.44 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $12.64
MG Growth Estimate 15.00%
MG Value $486.54
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $183.24
MG Value based on 0% Growth $107.42
Market Implied Growth Rate 6.11%
Current Price $261.72
% of Intrinsic Value 53.79%

Canadian Pacific Railway Limited (USA) does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.4 in 2014 to an estimated $12.64 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.11% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian Pacific Railway Limited (USA) revealed the company was trading above its Graham Number of $115.43. The company pays a dividend of $2.19 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 20.71, which was below the industry average of 21.35, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-91.56.

Canadian Pacific Railway Limited (USA) receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$91.56
Graham Number $115.43
PEmg 20.71
Current Ratio 0.57
PB Ratio 5.70
Current Dividend $2.19
Dividend Yield 0.84%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,000,000,000
Total Current Liabilities $1,760,000,000
Long-Term Debt $7,936,000,000
Total Assets $20,685,000,000
Intangible Assets $196,000,000
Total Liabilities $14,111,000,000
Shares Outstanding (Diluted Average) 143,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.33
Dec2017 $16.44
Dec2016 $10.63
Dec2015 $8.40
Dec2014 $8.46
Dec2013 $4.96
Dec2012 $2.79
Dec2011 $3.34
Dec2010 $3.85
Dec2009 $3.30
Dec2008 $3.91
Dec2007 $6.08
Dec2006 $5.02
Dec2005 $3.39
Dec2004 $2.59
Dec2003 $2.52
Dec2002 $3.06
Dec2001 $2.27
Dec2000 $3.13
Dec1999 $0.19
Dec1998 $2.29

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $12.64
Dec2017 $11.45
Dec2016 $8.32
Dec2015 $6.64
Dec2014 $5.40
Dec2013 $3.80
Dec2012 $3.29
Dec2011 $3.73
Dec2010 $4.09
Dec2009 $4.25
Dec2008 $4.55
Dec2007 $4.56
Dec2006 $3.63
Dec2005 $2.88
Dec2004 $2.66
Dec2003 $2.54
Dec2002 $2.43

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Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian National Railway Co Valuation – August 2018 $TSE:CNR

Company Profile (excerpt from Reuters): Canadian National Railway Company, incorporated on August 24, 1995, is engaged in the rail and related transportation business. The Company’s network of approximately 20,000 route miles of track spans Canada and mid-America, connecting approximately three coasts, including the Atlantic, the Pacific and the Gulf of Mexico and serving the cities and ports of Vancouver, Prince Rupert (British Columbia), Montreal, Halifax, New Orleans, and Mobile (Alabama), and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth (Minnesota)/Superior (Wisconsin), and Jackson (Mississippi), with connections to all points in North America. The Company’s network and connections to all Class I railroads provide its customers access to the three North American Free Trade Agreement (NAFTA) nations. The Company carries over 300 million tons of cargo, serving exporters, importers, retailers, farmers and manufacturers. The Company’s freight includes seven commodity groups representing a portfolio of goods, including petroleum and chemicals, metals and minerals, forest products, coal, grain and fertilizers, intermodal and automotive.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CNR – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $78,467,470,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.64 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 151.70% Pass
6. Moderate PEmg Ratio PEmg < 20 20.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.88 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.64 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.93 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.53
MG Growth Estimate 10.69%
MG Value $165.20
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $80.19
MG Value based on 0% Growth $47.01
Market Implied Growth Rate 6.12%
Current Price $114.68
% of Intrinsic Value 69.42%

Canadian National Railway (USA) does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.23 in 2014 to an estimated $5.53 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian National Railway (USA) revealed the company was trading above its Graham Number of $52.54. The company pays a dividend of $1.65 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 20.74, which was below the industry average of 21.35, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.51.

Canadian National Railway (USA) receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.51
Graham Number $52.54
PEmg 20.74
Current Ratio 0.64
PB Ratio 4.88
Current Dividend $1.65
Dividend Yield 1.44%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $2,842,000,000
Total Current Liabilities $4,430,000,000
Long-Term Debt $9,416,000,000
Total Assets $39,805,000,000
Intangible Assets $268,000,000
Total Liabilities $22,436,000,000
Shares Outstanding (Diluted Average) 739,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.47
Dec2017 $7.24
Dec2016 $4.67
Dec2015 $4.39
Dec2014 $3.85
Dec2013 $3.09
Dec2012 $3.06
Dec2011 $2.71
Dec2010 $2.24
Dec2009 $1.96
Dec2008 $1.98
Dec2007 $2.13
Dec2006 $1.96
Dec2005 $1.39
Dec2004 $1.09
Dec2003 $0.87
Dec2002 $0.66
Dec2001 $0.87
Dec2000 $0.78
Dec1999 $0.62
Dec1998 $0.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.53
Dec2017 $5.26
Dec2016 $4.11
Dec2015 $3.70
Dec2014 $3.23
Dec2013 $2.82
Dec2012 $2.58
Dec2011 $2.30
Dec2010 $2.08
Dec2009 $1.96
Dec2008 $1.87
Dec2007 $1.71
Dec2006 $1.40
Dec2005 $1.07
Dec2004 $0.90
Dec2003 $0.79
Dec2002 $0.71

Recommended Reading:

Other ModernGraham posts about the company

Canadian National Railway Co Valuation – Initial Valuation $TSE:CNR

Other ModernGraham posts about related companies

Kansas City Southern Valuation – May 2018 $KSU
Norfolk Southern Corp Valuation – April 2018-corrected
Norfolk Southern Corp Valuation – April 2018 $NSC
CSX Corporation Valuation – April 2018 $CSX
Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP
Canadian National Railway Co Valuation – Initial Valuation $TSE:CNR
Kansas City Southern Valuation – December 2016 $KSU
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian Natural Resources Ltd Valuation – August 2018 $TSE:CNQ

Company Profile (excerpt from Reuters): Canadian Natural Resources Limited, incorporated on January 6, 1985, is an independent crude oil and natural gas exploration, development and production company. The Company’s segments include Exploration and Production, Oil Sands Mining and Upgrading, and Midstream. The Exploration and Production segment includes exploration, development, production and marketing of crude oil, natural gas liquids (NGLs) and natural gas. The Company’s exploration and production operations are focused in North America in Western Canada, the United Kingdom portion of the North Sea, and Cote d’Ivoire, Gabon and South Africa in Offshore Africa. The Horizon Oil Sands Mining and Upgrading segment (Horizon) produces synthetic crude oil (SCO) through bitumen mining and upgrading operations. Midstream activities include the Company’s pipeline operations, an electricity co-generation system and an investment in the North West Redwater Partnership (Redwater Partnership). As of December 31, 2016, the Company’s gross proved crude oil, bitumen (thermal oil), SCO and NGLs reserves totaled 4,866 million barrels (MMbbl), and the Company’s gross proved plus probable crude oil, bitumen (thermal oil), SCO and NGLs reserves totaled 7,667 MMbbl. At December 31, 2016, the Company’s gross proved natural gas reserves totaled 6,617 billion cubic feet (Bcf), and the Company’s gross proved plus probable natural gas reserves totaled 9,076 Bcf.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CNQ – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $57,962,720,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.01 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -1.11% Fail
6. Moderate PEmg Ratio PEmg < 20 25.31 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.78 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.01 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 367.83 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.83
MG Growth Estimate -4.09%
MG Value $0.57
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $26.51
MG Value based on 0% Growth $15.54
Market Implied Growth Rate 8.41%
Current Price $46.27
% of Intrinsic Value 8065.13%

Canadian Natural Resource Ltd (USA) does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.51 in 2014 to an estimated $1.83 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.41% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Canadian Natural Resource Ltd (USA) revealed the company was trading above its Graham Number of $45.09. The company pays a dividend of $1.1 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 25.31, which was below the industry average of 59.52, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-29.89.

Canadian Natural Resource Ltd (USA) scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$29.89
Graham Number $45.09
PEmg 25.31
Current Ratio 1.01
PB Ratio 1.78
Current Dividend $1.10
Dividend Yield 2.38%
Number of Consecutive Years of Dividend Growth 18

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
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Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $4,386,000,000
Total Current Liabilities $4,328,000,000
Long-Term Debt $21,334,000,000
Total Assets $73,214,000,000
Intangible Assets $0
Total Liabilities $41,188,000,000
Shares Outstanding (Diluted Average) 1,231,336,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.49
Dec2017 $2.03
Dec2016 -$0.19
Dec2015 -$0.58
Dec2014 $3.58
Dec2013 $2.08
Dec2012 $1.72
Dec2011 $2.40
Dec2010 $1.53
Dec2009 $1.46
Dec2008 $4.61
Dec2007 $2.42
Dec2006 $2.35
Dec2005 $0.98
Dec2004 $1.30
Dec2003 $1.27
Dec2002 $0.54
Dec2001 $0.65
Dec2000 $0.81
Dec1999 $0.24
Dec1998 $0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.83
Dec2017 $1.13
Dec2016 $0.89
Dec2015 $1.57
Dec2014 $2.51
Dec2013 $1.93
Dec2012 $2.02
Dec2011 $2.28
Dec2010 $2.30
Dec2009 $2.58
Dec2008 $2.87
Dec2007 $1.89
Dec2006 $1.51
Dec2005 $1.04
Dec2004 $1.02
Dec2003 $0.82
Dec2002 $0.55

Recommended Reading:

Other ModernGraham posts about the company

Canadian National Resources Ltd Valuation – Initial Coverage $TSE:CNQ

Other ModernGraham posts about related companies

SM Energy Co Valuation – August 2018 $SM
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CIRCOR International Inc Valuation – July 2018 $CIR
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World Fuel Services Corp Valuation – July 2018 $INT
Shawcor Ltd Valuation – July 2018 $TSE-SCL
Imperial Oil Ltd Valuation – July 2018 $IMO
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WPX Energy Inc Valuation – July 2018 $WPX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian Imperial Bank of Commerce Valuation – July 2018 $TSE:CM

Company Profile (excerpt from Reuters): Canadian Imperial Bank of Commerce (CIBC), incorporated on May 17, 1995, is a global financial institution. The Company provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets. The Company’s Retail and Business Banking segment provides personal and business clients across Canada with financial advice, products and services in its banking centers or through remote channels, such as mobile advisors, telephone, online or mobile banking. The Company’s Wealth Management segment provides advice and investment solutions. The Company’s Capital Markets segment provides integrated credit and global markets products, investment banking advisory services and research to corporate, government and institutional clients around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CM – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $51,959,440,000 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 122.52% Pass
5. Moderate PEmg Ratio PEmg < 20 10.95 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.58 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.83
MG Growth Estimate 6.31%
MG Value $228.71
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $157.00
MG Value based on 0% Growth $92.03
Market Implied Growth Rate 1.23%
Current Price $118.58
% of Intrinsic Value 51.85%

Canadian Imperial Bank of Commerce (USA) qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $7.62 in 2014 to an estimated $10.83 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.23% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian Imperial Bank of Commerce (USA) revealed the company was trading below its Graham Number of $133.77. The company pays a dividend of $5.08 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.95, which was below the industry average of 20.05, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Canadian Imperial Bank of Commerce (USA) fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $133.77
PEmg 10.95
PB Ratio 1.58
Dividend Yield 4.28%
TTM Dividend $5.08
Number of Consecutive Years of Dividend Growth 7

 

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2018
Long-Term Debt & Capital Lease Obligation $4,633,000,000
Total Assets $590,537,000,000
Intangible Assets $7,375,000,000
Total Liabilities $556,991,000,000
Shares Outstanding (Diluted Average) 445,658,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.95
Oct2017 $11.24
Oct2016 $10.70
Oct2015 $8.87
Oct2014 $7.86
Oct2013 $8.11
Oct2012 $7.76
Oct2011 $6.71
Oct2010 $5.87
Oct2009 $2.65
Oct2008 -$5.89
Oct2007 $9.21
Oct2006 $7.43
Oct2005 -$0.46
Oct2004 $5.53
Oct2003 $5.18
Oct2002 $1.35
Oct2001 $4.13
Oct2000 $4.86
Oct1999 $2.22
Oct1998 $2.26

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.83
Oct2017 $9.96
Oct2016 $9.10
Oct2015 $8.16
Oct2014 $7.62
Oct2013 $7.07
Oct2012 $5.51
Oct2011 $4.16
Oct2010 $3.21
Oct2009 $2.11
Oct2008 $2.29
Oct2007 $6.04
Oct2006 $4.24
Oct2005 $2.81
Oct2004 $4.37
Oct2003 $3.71
Oct2002 $2.97

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Canadian Stocks for Intelligent Investors – February 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017
15 Best Stocks for Value Investors This Week – 1/14/17
Canadian Imperial Bank of Commerce Valuation – Initial Coverage $TSE:CM

Other ModernGraham posts about related companies

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Independent Bank Corp Valuation – July 2018 $INDB
Wells Fargo & Co Valuation – June 2018 $WFC
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Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian General Investments Ltd Valuation – July 2018 $TSE-CGI

Company Profile (excerpt from Reuters): Canadian General Investments Limited (CGI) is a closed-end investment fund focused on medium- to long-term investments in primarily Canadian corporations. The Company’s objective is to provide better than average returns to investors through prudent security selection, timely recognition of capital gains and appropriate income generating instruments. It invests in the sectors, such as financials, consumer discretionary, energy, Industrials, materials, information technology, telecommunication services, consumer staples, utilities and health care. CGI participates in a securities lending program with its custodian, CIBC Mellon Trust Company. The Company’s securities lending collateral includes Federal government debt securities, Provincial government debt securities, Equities and the United States government debt securities. Morgan Meighen & Associates Limited (MMA) serves as an investment manager for the Company.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CGI – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $528,412,700 Fail
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 84.53% Pass
5. Moderate PEmg Ratio PEmg < 20 5.87 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.76 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Fail
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.32
MG Growth Estimate 12.40%
MG Value $143.83
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $62.62
MG Value based on 0% Growth $36.71
Market Implied Growth Rate -1.32%
Current Price $25.33
% of Intrinsic Value 17.61%

Canadian General Investments Ltd does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability over the last ten years. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.36 in 2014 to an estimated $4.32 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.32% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian General Investments Ltd revealed the company was trading below its Graham Number of $66.5. The company pays a dividend of $0.72 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 5.87, which was below the industry average of 21.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Canadian General Investments Ltd performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $66.50
PEmg 5.87
PB Ratio 0.76
Dividend Yield 2.84%
TTM Dividend $0.72
Number of Consecutive Years of Dividend Growth 5

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $74,902,000
Total Assets $841,618,000
Intangible Assets $0
Total Liabilities $150,178,000
Shares Outstanding (Diluted Average) 20,861,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.93
Dec2017 $5.93
Dec2016 $4.36
Dec2015 -$1.92
Dec2014 $2.17
Dec2013 $4.54
Dec2012 $2.16
Dec2011 -$2.90
Dec2010 $5.77
Dec2009 $5.92
Dec2008 -$18.79
Dec2007 $2.35
Dec2006 $8.34
Dec2005 $6.43
Dec2004 $4.90

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.32
Dec2017 $3.35
Dec2016 $2.12
Dec2015 $0.94
Dec2014 $2.36
Dec2013 $2.67
Dec2012 $0.64
Dec2011 -$0.59
Dec2010 $0.61
Dec2009 -$1.03
Dec2008 -$2.78
Dec2007 $4.95
Dec2006 $5.47
Dec2005 $3.45
Dec2004 $1.63

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

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Moody’s Corporation – June 2018 $MCO
Charles Schwab Corp Valuation – June 2018 $SCHW
Willis Towers Watson PLC Valuation – Initial Coverage June 2018 $WLTW
PayPal Holdings Inc Valuation – June 2018 $PYPL
Synchrony Financial Valuation – June 2018 $SYF

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Analog Devices Inc Valuation – June 2018 $ADI

Company Profile (excerpt from Reuters): Analog Devices, Inc. (Analog Devices), incorporated on January 18, 1965, designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing(DSP) technology, including integrated circuits (ICs), algorithms, software and subsystems. The Company provides Analog Products, such as Converters, Amplifiers/Radio Frequency, Other Analog, and Power Management and Reference. It also offers Digital Signal Processing Products (DSPs). The Company operates in the United States, Rest of North/South America, Europe, Japan and China.

ADI Chart

ADI data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADI – June 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $36,388,670,573 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.53 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 57.10% Pass
6. Moderate PEmg Ratio PEmg < 20 32.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.48 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.53 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.17 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.06
MG Growth Estimate 5.96%
MG Value $62.42
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $44.31
MG Value based on 0% Growth $25.98
Market Implied Growth Rate 11.85%
Current Price $98.40
% of Intrinsic Value 157.63%

Analog Devices, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.19 in 2014 to an estimated $3.06 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.85% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Analog Devices, Inc. revealed the company was trading above its Graham Number of $53.3. The company pays a dividend of $1.77 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 32.2, which was below the industry average of 55.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-21.35.

Analog Devices, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.35
Graham Number $53.30
PEmg 32.20
Current Ratio 1.53
PB Ratio 3.48
Current Dividend $1.77
Dividend Yield 1.80%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2018
Total Current Assets $2,188,274,000
Total Current Liabilities $1,432,863,000
Long-Term Debt $6,926,441,000
Total Assets $20,776,454,000
Intangible Assets $17,324,376,000
Total Liabilities $10,191,099,000
Shares Outstanding (Diluted Average) 374,778,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.58
Oct2017 $2.07
Oct2016 $2.76
Oct2015 $2.20
Oct2014 $1.98
Oct2013 $2.14
Oct2012 $2.13
Oct2011 $2.81
Oct2010 $2.33
Oct2009 $0.85
Oct2008 $2.67
Oct2007 $1.50
Oct2006 $1.48
Oct2005 $1.08
Oct2004 $1.45
Oct2003 $0.78
Oct2002 $0.28
Oct2001 $0.93
Oct2000 $1.59
Oct1999 $0.55
Oct1998 $0.36

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.06
Oct2017 $2.27
Oct2016 $2.33
Oct2015 $2.16
Oct2014 $2.19
Oct2013 $2.21
Oct2012 $2.22
Oct2011 $2.18
Oct2010 $1.84
Oct2009 $1.56
Oct2008 $1.83
Oct2007 $1.36
Oct2006 $1.19
Oct2005 $1.00
Oct2004 $0.98
Oct2003 $0.77
Oct2002 $0.76

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leucadia National Corp Valuation – March 2018 $LUK

Company Profile (excerpt from Reuters): Leucadia National Corporation (Leucadia), incorporated on May 24, 1968, is a diversified holding company focused on return on investment and long-term value. The Company’s segments, based on requirements, are Jefferies, National Beef, and Corporate and other. The Company’s financial services businesses include Jefferies Group LLC (investment banking and capital markets), Leucadia Asset Management (asset management), Berkadia Commercial Mortgage, LLC (commercial mortgage banking and servicing), FXCM Group, LLC (a publicly traded company providing online foreign exchange trading), HomeFed Corporation (HomeFed) (a publicly traded real estate company) and Foursight Capital and Chrome Capital (vehicle finance). The Company also owns and has investments in an array of other businesses, including National Beef (beef processing), HRG Group, Inc. (HRG), Vitesse Energy, LLC and Juneau Energy, LLC (oil and gas exploration and development), Garcadia (automobile dealerships), Linkem (fixed wireless broadband services in Italy), Conwed Plastics and Idaho Timber (manufacturing) and Golden Queen Mining Company, LLC (a gold and silver mining project).

LUK Chart

LUK data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LUK – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,098,087,309 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.38 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -75.20% Fail
6. Moderate PEmg Ratio PEmg < 20 25.18 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.82 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.38 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.72 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.90
MG Growth Estimate -4.25%
MG Value $6.60
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $13.09
MG Value based on 0% Growth $7.67
Market Implied Growth Rate 8.34%
Current Price $22.73
% of Intrinsic Value 344.32%

Leucadia National Corp. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the low current ratio, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.69 in 2014 to an estimated $0.9 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.34% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Leucadia National Corp. revealed the company was trading below its Graham Number of $33.32. The company pays a dividend of $0.33 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 25.18, which was below the industry average of 25.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $6.6.

Leucadia National Corp. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $6.60
Graham Number $33.32
PEmg 25.18
Current Ratio 1.38
PB Ratio 0.82
Current Dividend $0.33
Dividend Yield 1.43%
Number of Consecutive Years of Dividend Growth 1

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $39,483,108,000
Total Current Liabilities $28,592,753,000
Long-Term Debt $7,885,783,000
Total Assets $47,169,108,000
Intangible Assets $2,463,180,000
Total Liabilities $37,063,151,000
Shares Outstanding (Diluted Average) 366,580,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.74
Dec2017 $0.45
Dec2016 $0.34
Dec2015 $0.74
Dec2014 $0.54
Dec2013 $1.06
Dec2012 $3.44
Dec2011 $0.10
Dec2010 $7.85
Dec2009 $2.25
Dec2008 -$11.00
Dec2007 $2.10
Dec2006 $0.85
Dec2005 $7.14
Dec2004 $0.67
Dec2003 $0.52
Dec2002 $0.96
Dec2001 -$0.05
Dec2000 $0.70
Dec1999 $1.21
Dec1998 $0.29

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.90
Dec2017 $0.53
Dec2016 $0.79
Dec2015 $1.07
Dec2014 $1.69
Dec2013 $2.49
Dec2012 $2.31
Dec2011 $1.25
Dec2010 $1.35
Dec2009 -$1.17
Dec2008 -$1.94
Dec2007 $2.48
Dec2006 $2.45
Dec2005 $2.79
Dec2004 $0.59
Dec2003 $0.59
Dec2002 $0.63

Recommended Reading:

Other ModernGraham posts about the company

30 Companies in the Spotlight This Week – 5/23/15
Leucadia National Corporation Annual Valuation – 2015 $LUK
58 Companies in the Spotlight This Week – 1/31/15
Leucadia National Corporation Quarterly Valuation – January 2015 $LUK
5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows – December 2014

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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