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Albemarle Corp Valuation – January 2019 $ALB

Company Profile (excerpt from Reuters): Albemarle Corporation, incorporated on November 24, 1993, is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The Company operates through three segments: Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Lithium and Advanced Materials segment consists of two product categories: Lithium and Performance Catalyst Solutions. The bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Company serves various end markets, including petroleum refining, consumer electronics, energy storage, construction, automotive, lubricants, pharmaceuticals, crop protection, food safety and custom chemistry services.

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALB – January 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 $8,212,910,174 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.83 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 31.61% Fail
6. Moderate PEmg Ratio PEmg < 20 19.55 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 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 1.83 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.51 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 $3.96
MG Growth Estimate 2.64%
MG Value $54.54
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $57.36
MG Value based on 0% Growth $33.63
Market Implied Growth Rate 5.52%
Current Price $77.33
% of Intrinsic Value 141.79%

Albemarle Corporation is suitable for the Enterprising Investor but not 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 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 $3.36 in 2014 to an estimated $3.96 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% 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 Albemarle Corporation revealed the company was trading above its Graham Number of $69.88. The company pays a dividend of $1.28 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 19.55, which was below the industry average of 20.47, 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 $-16.08.

Albemarle Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.08
Graham Number $69.88
PEmg 19.55
Current Ratio 1.83
PB Ratio 2.27
Current Dividend $1.28
Dividend Yield 1.66%
Number of Consecutive Years of Dividend Growth 20

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 9/1/2018
Total Current Assets $2,059,577,000
Total Current Liabilities $1,127,009,000
Long-Term Debt $1,411,605,000
Total Assets $7,487,195,000
Intangible Assets $1,988,907,000
Total Liabilities $3,800,918,000
Shares Outstanding (Diluted Average) 108,302,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.53
Dec2017 $0.49
Dec2016 $5.68
Dec2015 $3.00
Dec2014 $1.69
Dec2013 $4.90
Dec2012 $3.47
Dec2011 $4.28
Dec2010 $3.43
Dec2009 $1.94
Dec2008 $2.09
Dec2007 $2.36
Dec2006 $1.47
Dec2005 $1.20
Dec2004 $0.65
Dec2003 $0.86
Dec2002 $0.85
Dec2001 $0.74
Dec2000 $1.09
Dec1999 $0.94
Dec1998 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.96
Dec2017 $2.83
Dec2016 $3.92
Dec2015 $3.18
Dec2014 $3.36
Dec2013 $4.00
Dec2012 $3.38
Dec2011 $3.17
Dec2010 $2.49
Dec2009 $1.95
Dec2008 $1.82
Dec2007 $1.56
Dec2006 $1.11
Dec2005 $0.90
Dec2004 $0.78
Dec2003 $0.87
Dec2002 $0.87

Recommended Reading:

Other ModernGraham posts about the company

Albemarle Corp Valuation – March 2018 $ALB
Albemarle Corp Valuation – March 2017 $ALB
Albemarle Corporation Valuation – August 2016 $ALB
Albemarle Corp Valuation – February 2016 $ALB
Albemarle Corporation Valuation – November 2015 Update $ALB

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Innospec Inc Valuation – April 2018 $IOSP
Innophos Holdings Inc Valuation – March 2018 $IPHS
Olin Corp Valuation – March 2018 $OLN
A Schulman Inc Valuation – March 2018 $SHLM
FMC Corp Valuation – March 2018 $FMC
Compass Minerals International Inc Valuation – March 2018 $CMP
Ashland Global Holdings Inc Valuation – March 2018 $ASH

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.

Albemarle Corp Valuation – March 2018 $ALB

Company Profile (obtained from Marketwatch): Albemarle Corp. engages in developing, manufacturing and marketing of chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, transportation, pharmaceuticals, crop production, food-safety and custom chemistry services. It operates through three segments: Lithium and Advanced Materials, Bromine Specialties, and Refining Solutions. The Lithium and Advanced Materials segment consists of two divisions: Lithium and Performance Catalyst Solutions. The Lithium business develops and manufactures basic lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and value-added lithium specialties and reagents, including butyllithium and lithium aluminum hydride. The Performance Catalyst Solutions division includes four product lines: polymer catalysts, curatives, organometallics and electronic materials. The Bromine Specialties Segment engages in bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Refining Solutions Segment includes two product lines: clean fuels technologies, which is primarily composed of hydro processing catalysts, and heavy oil upgrading, which is primarily composed of fluidized catalytic cracking catalysts and additives. The company was founded in 1993 and is headquartered in Charlotte, NC.

ALB Chart

ALB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALB – 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 $11,055,085,718 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.06 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 9.53% Fail
6. Moderate PEmg Ratio PEmg < 20 30.82 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.05 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 2.06 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.11 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 $3.25
MG Growth Estimate -0.52%
MG Value $24.19
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $47.07
MG Value based on 0% Growth $27.59
Market Implied Growth Rate 11.16%
Current Price $100.05
% of Intrinsic Value 413.54%

Albemarle Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net 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 $3.36 in 2014 to an estimated $3.25 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.16% 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 Albemarle Corporation revealed the company was trading above its Graham Number of $57.36. The company pays a dividend of $1.28 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 30.82, which was below the industry average of 31.55, 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 $-14.25.

Albemarle Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$14.25
Graham Number $57.36
PEmg 30.82
Current Ratio 2.06
PB Ratio 3.05
Current Dividend $1.28
Dividend Yield 1.28%
Number of Consecutive Years of Dividend Growth 20

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
Total Current Assets $2,477,563,000
Total Current Liabilities $1,200,925,000
Long-Term Debt $1,415,360,000
Total Assets $7,750,772,000
Intangible Assets $2,031,858,000
Total Liabilities $4,076,223,000
Shares Outstanding (Diluted Average) 112,152,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.40
Dec2017 $0.49
Dec2016 $5.68
Dec2015 $3.00
Dec2014 $1.69
Dec2013 $4.90
Dec2012 $3.47
Dec2011 $4.28
Dec2010 $3.43
Dec2009 $1.94
Dec2008 $2.09
Dec2007 $2.36
Dec2006 $1.47
Dec2005 $1.20
Dec2004 $0.65
Dec2003 $0.86
Dec2002 $0.85
Dec2001 $0.74
Dec2000 $1.09
Dec1999 $0.94
Dec1998 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.25
Dec2017 $2.83
Dec2016 $3.92
Dec2015 $3.18
Dec2014 $3.36
Dec2013 $4.00
Dec2012 $3.38
Dec2011 $3.17
Dec2010 $2.49
Dec2009 $1.95
Dec2008 $1.82
Dec2007 $1.56
Dec2006 $1.11
Dec2005 $0.90
Dec2004 $0.78
Dec2003 $0.87
Dec2002 $0.87

Recommended Reading:

Other ModernGraham posts about the company

Albemarle Corp Valuation – February 2016 $ALB
Albemarle Corporation Valuation – November 2015 Update $ALB
Albemarle Corporation Analysis – Initial Coverage $ALB

Other ModernGraham posts about related companies

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Eastman Chemical Co Valuation – March 2018 $EMN
LyondellBasell Industries NV Valuation – March 2018 $LYB
DowDuPont Inc Valuation – February 2018 $DWDP
Green Plains Inc Valuation – Initial Coverage $GPRE
PolyOne Corp Valuation – Initial Coverage $POL
Ingevity Corp Valuation – Initial Coverage $NGVT

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.

Albany International Corp Valuation – Initial Coverage $AIN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Undervalued Stocks for the Enterprising Investor – August 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Albany International Corp (AIN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Albany International Corp. is focused on textiles and materials processing business. The Company operates through two segments: Machine Clothing and Albany Engineered Composites. The Company’s Machine Clothing segment supplies permeable and impermeable belts used in the manufacture of paper, paperboard, nonwovens, fiber cement and various other industrial applications. The Machine Clothing segment also supplies customized, consumable fabrics used in the manufacturing process in the pulp, corrugator, nonwovens, fiber cement, building products, and tannery and textile industries. Its Albany Engineered Composites segment includes Albany Safran Composites, LLC (ASC), in which its customer SAFRAN Group owns interest and provides engineered composite structures based on its technology to customers in the aerospace and defense industries.

AIN Chart

AIN data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of AIN – August 2017

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 $1,644,153,897 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.47 Pass
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 -290.04% Fail
6. Moderate PEmg Ratio PEmg < 20 35.19 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.06 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 2.47 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.48 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 $1.45
MG Growth Estimate 13.94%
MG Value $52.82
Opinion Fairly Valued
MG Grade C
MG Value based on 3% Growth $21.05
MG Value based on 0% Growth $12.34
Market Implied Growth Rate 13.35%
Current Price $51.10
% of Intrinsic Value 96.75%

Albany International Corp. is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the  small size, insufficient earnings stability or growth over the last ten years, and 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 $0.75 in 2013 to an estimated $1.45 for 2017.  This level of demonstrated earnings growth supports the market’s implied estimate of 13.35% 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 Albany International Corp. revealed the company was trading above its Graham Number of $21.83.  The company pays a dividend of $0.68 per share, for a yield of 1.3%  Its PEmg (price over earnings per share – ModernGraham) was 35.19, which was above the industry average of 24.17.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-8.28.

Albany International 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) -$8.28
Graham Number $21.83
PEmg 35.19
Current Ratio 2.47
PB Ratio 3.06
Current Dividend $0.68
Dividend Yield 1.33%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

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 6/1/2017
Total Current Assets $503,447,000
Total Current Liabilities $204,180,000
Long-Term Debt $444,030,000
Total Assets $1,308,268,000
Intangible Assets $227,244,000
Total Liabilities $770,208,000
Shares Outstanding (Diluted Average) 32,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.34
Dec2016 $1.64
Dec2015 $1.79
Dec2014 $1.30
Dec2013 $0.55
Dec2012 $0.97
Dec2011 $1.11
Dec2010 $1.21
Dec2009 -$1.09
Dec2008 -$2.63
Dec2007 $0.60
Dec2006 $1.92
Dec2005 $2.22
Dec2004 $0.31
Dec2003 $1.61
Dec2002 $1.50
Dec2001 $1.03
Dec2000 $1.24
Dec1999 $0.99
Dec1998 $1.01
Dec1997 $1.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.45
Dec2016 $1.42
Dec2015 $1.26
Dec2014 $1.00
Dec2013 $0.75
Dec2012 $0.54
Dec2011 $0.16
Dec2010 -$0.21
Dec2009 -$0.54
Dec2008 -$0.02
Dec2007 $1.30
Dec2006 $1.61
Dec2005 $1.41
Dec2004 $1.05
Dec2003 $1.37
Dec2002 $1.22
Dec2001 $1.11

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

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Stanley Black & Decker Inc Valuation – April 2017 $SWK
Lindsay Corp Valuation – Initial Coverage $LNN
Lennox International Inc Valuation – Initial Coverage $LII
Standex Int’l Corp Valuation – Initial Coverage $SXI
Pentair PLC Valuation – March 2017 $PNR
Lincoln Electric Holdings Inc Valuation – Initial Coverage $LECO
Lydall Inc Valuation – Initial Coverage $LDL
Regal Beloit Corp Valuation – February 2017 $RBC

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.

Albemarle Corp Valuation – March 2017 $ALB

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Albemarle Corp (ALB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Albemarle Corporation is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The Company operates through three segments: Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Lithium and Advanced Materials segment consist of two product categories: Lithium and Performance Catalyst Solutions. The bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Company serves various end markets, including petroleum refining, consumer electronics, energy storage, construction, automotive, lubricants, pharmaceuticals, crop protection, food safety and custom chemistry services. As of December 31, 2016, the Company and its joint ventures operated 31 production and research and development (R&D) facilities, as well as a number of administrative and sales offices, around the world.

ALB Chart

ALB data by YCharts

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ALB – March 2017

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 $12,068,159,047 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.90 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 71.18% Pass
6. Moderate PEmg Ratio PEmg < 20 26.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.17 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 2.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.98 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 $4.03
MG Growth Estimate 0.11%
MG Value $35.12
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $58.44
MG Value based on 0% Growth $34.26
Market Implied Growth Rate 8.93%
Current Price $106.21
% of Intrinsic Value 302.41%

Albemarle Corporation 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 has no initial concerns. 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 $4 in 2013 to an estimated $4.03 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.93% 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 Albemarle Corporation revealed the company was trading above its Graham Number of $55.71. The company pays a dividend of $1.22 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 26.35, which was above the industry average of 22.46. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.36.

Albemarle Corporation receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.36
Graham Number $55.71
PEmg 26.35
Current Ratio 2.90
PB Ratio 3.17
Current Dividend $1.22
Dividend Yield 1.15%
Number of Consecutive Years of Dividend Growth 20

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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 12/1/2016
Total Current Assets $3,306,618,000
Total Current Liabilities $1,140,103,000
Long-Term Debt $2,121,718,000
Total Assets $8,161,207,000
Intangible Assets $1,894,596,000
Total Liabilities $4,366,145,000
Shares Outstanding (Diluted Average) 113,239,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.09
Dec2016 $5.68
Dec2015 $3.00
Dec2014 $1.69
Dec2013 $4.90
Dec2012 $3.47
Dec2011 $4.28
Dec2010 $3.43
Dec2009 $1.94
Dec2008 $2.09
Dec2007 $2.36
Dec2006 $1.47
Dec2005 $1.20
Dec2004 $0.65
Dec2003 $0.86
Dec2002 $0.85
Dec2001 $0.74
Dec2000 $1.09
Dec1999 $0.94
Dec1998 $0.82
Dec1997 $0.72

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.03
Dec2016 $3.92
Dec2015 $3.18
Dec2014 $3.36
Dec2013 $4.00
Dec2012 $3.38
Dec2011 $3.17
Dec2010 $2.49
Dec2009 $1.95
Dec2008 $1.82
Dec2007 $1.56
Dec2006 $1.11
Dec2005 $0.90
Dec2004 $0.78
Dec2003 $0.87
Dec2002 $0.87
Dec2001 $0.88

Recommended Reading:

Other ModernGraham posts about the company

Albemarle Corp Valuation – February 2016 $ALB
Albemarle Corporation Valuation – November 2015 Update $ALB
Albemarle Corporation Analysis – Initial Coverage $ALB

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A Schulman Inc Valuation – Initial Coverage $SHLM
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Innospec Inc Valuation – Initial Coverage $IOSP
Chemtrade Logistics Income Fund Valuation – Initial Coverage $TSE:CHE.UN
Albemarle Corporation Valuation – August 2016 $ALB

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.

Albemarle Corporation Valuation – August 2016 $ALB

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Albemarle Corporation (ALB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Albemarle Corporation is a developer, manufacturer and marketer of specialty chemicals across a range of end markets, including the petroleum refining, consumer electronics, energy storage, construction, automotive, steel and aerospace, lubricants, pharmaceuticals, heating, ventilation, and aluminum finishing. The Company operates through three segments: Performance Chemicals, Refining Solutions and Chemetall Surface Treatment. Its Performance Chemicals segment consists of three product categories: Lithium, Performance Catalyst Solutions and Bromine. Its Refining Solutions Segment offers two product lines, including Clean Fuels Technologies, which is composed of hydroprocessing catalysts, and Heavy Oil Upgrading, which is composed of fluidized catalytic cracking (FCC) catalysts and additives. Its Chemetall Surface Treatment segment operates under the Chemetall brand name and is a supplier of applied surface treatments and services for metal, plastic and glass substrates.

ALB Chart

ALB data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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ModernGraham Valuation of ALB – August 2016

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 $9,089,139,541 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.32 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 -16.43% Fail
6. Moderate PEmg Ratio PEmg < 20 36.98 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.97 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 1.32 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.19 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

ALB value chart August 2016

EPSmg $2.24
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $32.47
MG Value based on 0% Growth $19.03
Market Implied Growth Rate 14.24%
Current Price $82.81
% of Intrinsic Value N/A

Albemarle Corporation 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 high PEmg and PB ratios. 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 $3.38 in 2012 to an estimated $2.24 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.24% 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 Albemarle Corporation revealed the company was trading above its Graham Number of $20.27. The company pays a dividend of $1.19 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 36.98, which was above the industry average of 18.73. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-40.89.

Albemarle Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

ALB charts August 2016

Net Current Asset Value (NCAV) -$40.89
Graham Number $20.27
PEmg 36.98
Current Ratio 1.32
PB Ratio 2.97
Current Dividend $1.19
Dividend Yield 1.44%
Number of Consecutive Years of Dividend Growth 20

[/not-level-free]

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 6/1/2016
Total Current Assets $1,527,760,000
Total Current Liabilities $1,159,058,000
Long-Term Debt $3,019,478,000
Total Assets $9,312,381,000
Intangible Assets $1,853,537,000
Total Liabilities $6,155,766,000
Shares Outstanding (Diluted Average) 113,175,000

Earnings Per Share History

Next Fiscal Year Estimate $0.65
Dec2015 $3.00
Dec2014 $1.69
Dec2013 $4.90
Dec2012 $3.47
Dec2011 $4.28
Dec2010 $3.43
Dec2009 $1.94
Dec2008 $2.09
Dec2007 $2.36
Dec2006 $1.47
Dec2005 $1.20
Dec2004 $0.65
Dec2003 $0.86
Dec2002 $0.85
Dec2001 $0.74
Dec2000 $1.09
Dec1999 $0.94
Dec1998 $0.82
Dec1997 $0.72
Dec1996 $1.33

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.24
Dec2015 $3.18
Dec2014 $3.36
Dec2013 $4.00
Dec2012 $3.38
Dec2011 $3.17
Dec2010 $2.49
Dec2009 $1.95
Dec2008 $1.82
Dec2007 $1.56
Dec2006 $1.11
Dec2005 $0.90
Dec2004 $0.78
Dec2003 $0.87
Dec2002 $0.87
Dec2001 $0.88
Dec2000 $0.96

Recommended Reading:

Other ModernGraham posts about the company

Albemarle Corp Valuation – February 2016 $ALB
Albemarle Corporation Valuation – November 2015 Update $ALB
Albemarle Corp Valuation – February 2016 $ALB
Albemarle Corporation Valuation – November 2015 Update $ALB
Albemarle Corporation Analysis – Initial Coverage $ALB

Other ModernGraham posts about related companies

Air Products & Chemicals Inc Valuation – August 2016 $APD
Ashland Inc Valuation – July 2016 $ASH
FMC Corporation Valuation – July 2016 $FMC
Eastman Chemical Company Valuation – July 2016 $EMN
Dow Chemical Co Valuation – July 2016 $DOW
Olin Corporation Valuation – June 2016 $OLN
LyondellBasell Industries Valuation – June 2016 $LYB
Praxair Inc Valuation – June 2016 $PX
Albemarle Corp Valuation – February 2016 $ALB
Airgas Inc Stock Valuation – February 2016 $ARG

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.

Albemarle Corp Valuation – February 2016 $ALB

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Albemarle Corp (ALB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Albemarle Corporation (Albemarle) is a developer, manufacturer and marketer of specialty chemicals across a range of end markets, including the petroleum refining, consumer electronics, plastics/packaging, construction, automotive, lubricants, pharmaceuticals, crop protection, food-safety and custom chemistry services markets. The Company operates through two segments: Performance Chemicals and Catalyst Solutions. As of December 31, 2014, the Performance Chemicals segment includes the Fire Safety Solutions, Specialty Chemicals and Fine Chemistry Services product categories. As of December 31, 2014, the Catalyst Solutions segment includes the Refinery Catalyst Solutions and Performance Catalyst Solutions product categories.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALB

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 $6,316,704,576 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.30 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 48.31% Pass
6. Moderate PEmg Ratio PEmg < 20 18.73 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.95 Pass
Score
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 1.30 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.93 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 Fail

Stage 2: Determination of Intrinsic Value

ALB value chart February 2016

EPSmg $2.91
MG Growth Estimate -1.22%
MG Value $17.65
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $42.18
MG Value based on 0% Growth $24.72
Market Implied Growth Rate 5.12%
Current Price $54.48
% of Intrinsic Value 308.70%

Albemarle Corporation 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 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 feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.17 in 2011 to an estimated $2.91 for 2015. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.12% 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 below the price.

Albemarle Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

ALB charts February 2016

Net Current Asset Value (NCAV) -$42.74
Graham Number $37.16
PEmg 18.73
Current Ratio 1.30
PB Ratio 1.95
Dividend Yield 2.10%
Number of Consecutive Years of Dividend Growth 20

[/not-level-free]

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 Sep2015
Total Current Assets $1,720,915,000
Total Current Liabilities $1,322,548,000
Long-Term Debt $3,558,964,000
Total Assets $9,675,064,000
Intangible Assets $4,708,079,000
Total Liabilities $6,530,575,000
Shares Outstanding (Diluted Average) 112,544,000

Earnings Per Share History

Next Fiscal Year Estimate $2.19
Dec2014 $1.69
Dec2013 $4.90
Dec2012 $3.47
Dec2011 $4.28
Dec2010 $3.43
Dec2009 $1.94
Dec2008 $2.09
Dec2007 $2.36
Dec2006 $1.47
Dec2005 $1.20
Dec2004 $0.65
Dec2003 $0.86
Dec2002 $0.85
Dec2001 $0.74
Dec2000 $1.09
Dec1999 $0.94
Dec1998 $0.82
Dec1997 $0.72
Dec1996 $1.33

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.91
Dec2014 $3.36
Dec2013 $4.00
Dec2012 $3.38
Dec2011 $3.17
Dec2010 $2.49
Dec2009 $1.95
Dec2008 $1.82
Dec2007 $1.56
Dec2006 $1.11
Dec2005 $0.90
Dec2004 $0.78
Dec2003 $0.87
Dec2002 $0.87
Dec2001 $0.88
Dec2000 $0.96
Dec1999 $0.85

Recommended Reading:

Other ModernGraham posts about the company

Albemarle Corporation Valuation – November 2015 Update $ALB
Albemarle Corporation Analysis – Initial Coverage $ALB

Other ModernGraham posts about related companies

Airgas Inc Stock Valuation – February 2016 $ARG
Air Products & Chemicals Inc Valuation – February 2016 $APD
FMC Corporation Valuation – January 2016 Update $FMC
Eastman Chemical Co Valuation – January 2016 $EMN
Ashland Inc Valuation – January 2016 Update $ASH
LyondellBasell Industries Valuation – November 2015 Update $LYB
Albemarle Corporation Valuation – November 2015 Update $ALB
Dow Chemical Company Analysis – October 2015 Update $DOW
Sigma-Aldrich Corporation Analysis – September 2015 Update $SIAL
FMC Corporation Analysis – September 2015 Update $FMC

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.

Albemarle Corporation Valuation – November 2015 Update $ALB

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Albemarle Corporation (ALB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Albemarle Corporation (Albemarle) is a developer, manufacturer and marketer of specialty chemicals across a range of end markets, including the petroleum refining, consumer electronics, plastics/packaging, construction, automotive, lubricants, pharmaceuticals, crop protection, food-safety and custom chemistry services markets. The Company operates through two segments: Performance Chemicals and Catalyst Solutions. As of December 31, 2014, the Performance Chemicals segment includes the Fire Safety Solutions, Specialty Chemicals and Fine Chemistry Services product categories. As of December 31, 2014, the Catalyst Solutions segment includes the Refinery Catalyst Solutions and Performance Catalyst Solutions product categories.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALB – November 2015

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 $5,486,487,256 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.30 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 48.48% Pass
6. Moderate PEmg Ratio PEmg < 20 16.74 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.74 Pass
Score
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 1.30 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.93 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 Fail

Stage 2: Determination of Intrinsic Value

ALB value Chart November 2015

EPSmg $2.91
MG Growth Estimate -1.20%
MG Value $17.76
Opinion Overvalued
MG Value based on 3% Growth $42.22
MG Value based on 0% Growth $24.75
Market Implied Growth Rate 4.12%
Current Price $48.74
% of Intrinsic Value 274.43%

Albemarle Corporation qualifies for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is only initially concerned by the low current ratio, while the Enterprising Investor is satisfied because the company meets the more stringent Defensive Investor requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $3.17 in 2011 to an estimated $2.91 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 4.12% 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 below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Albemarle Corporation (ALB)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

ALB Charts November 2015

Net Current Asset Value (NCAV) -$42.74
Graham Number $37.25
PEmg 16.74
Current Ratio 1.30
PB Ratio 1.74
Dividend Yield 2.35%
Number of Consecutive Years of Dividend Growth 20

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $1,720,915,000
Total Current Liabilities $1,322,548,000
Long-Term Debt $3,558,964,000
Total Assets $9,675,064,000
Intangible Assets $4,708,079,000
Total Liabilities $6,530,575,000
Shares Outstanding (Diluted Average) 112,544,000

Earnings Per Share History

Next Fiscal Year Estimate $2.20
Dec14 $1.69
Dec13 $4.90
Dec12 $3.47
Dec11 $4.28
Dec10 $3.43
Dec09 $1.94
Dec08 $2.09
Dec07 $2.36
Dec06 $1.47
Dec05 $1.20
Dec04 $0.65
Dec03 $0.86
Dec02 $0.85
Dec01 $0.74
Dec00 $1.09
Dec99 $0.94
Dec98 $0.82
Dec97 $0.72
Dec96 $1.33
Dec95 $0.59

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.91
Dec14 $3.36
Dec13 $4.00
Dec12 $3.38
Dec11 $3.17
Dec10 $2.49
Dec09 $1.95
Dec08 $1.82
Dec07 $1.56
Dec06 $1.11
Dec05 $0.90
Dec04 $0.78
Dec03 $0.87
Dec02 $0.87
Dec01 $0.88
Dec00 $0.96
Dec99 $0.89

Recommended Reading:

Other ModernGraham posts about the company

Albemarle Corporation Analysis – Initial Coverage $ALB

Other ModernGraham posts about related companies

Dow Chemical Company Analysis – October 2015 Update $DOW
Sigma-Aldrich Corporation Analysis – September 2015 Update $SIAL
FMC Corporation Analysis – September 2015 Update $FMC
Eastman Chemical Company Analysis – September 2015 Update $EMN
Ashland Inc. Analysis – Initial Coverage $ASH
The Best Companies of the Chemicals Industry – August 2015
LyondellBasell Industries Analysis – August 2015 Update $LYB
Albemarle Corporation Analysis – Initial Coverage $ALB
E I Du Pont de Nemours & Company Analysis – August 2015 Update $DD
Dow Chemical Analysis – July 2015 Update $DOW

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.

Albemarle Corporation Analysis – Initial Coverage $ALB

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Albemarle Corporation (ALB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Albemarle Corporation (Albemarle) is a developer, manufacturer and marketer of specialty chemicals across a range of end markets, including the petroleum refining, consumer electronics, plastics/packaging, construction, automotive, lubricants, pharmaceuticals, crop protection, food-safety and custom chemistry services markets. The Company operates through two segments: Performance Chemicals and Catalyst Solutions. As of December 31, 2014, the Performance Chemicals segment includes the Fire Safety Solutions, Specialty Chemicals and Fine Chemistry Services product categories. As of December 31, 2014, the Catalyst Solutions segment includes the Refinery Catalyst Solutions and Performance Catalyst Solutions product categories.

[level-free]

To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALB – August 2015

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 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 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 Pass
6. Moderate PEmg Ratio PEmg < 20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Pass
Score
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 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 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 3.03
MG Growth Estimate -0.63%
MG Value $21.94
Opinion Overvalued
MG Value based on 3% Growth $43.96
MG Value based on 0% Growth $25.77
Market Implied Growth Rate 4.23%
Current Price $51.43
% of Intrinsic Value 234.41%

Albemarle Corporation is suitable for the more conservative Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the low current ratio.  The Enterprising Investor has concerns but is willing to overlook them since the company passes the more stringent Defensive Investor requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $3.17 in 2011 to an estimated $3.03 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 4.23% 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 below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Albemarle Corporation (ALB)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

ALB charts August 2015

Net Current Asset Value (NCAV) -$43.85
PEmg 16.96
Current Ratio 1.21
PB Ratio 1.82
Dividend Yield 2.20%
Number of Consecutive Years of Dividend Growth 20

 

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $1,654,081,000
Total Current Liabilities $1,368,078,000
Long-Term Debt $3,562,308,000
Total Assets $9,770,809,000
Intangible Assets $4,708,800,000
Total Liabilities $6,591,732,000
Outstanding Shares 112,607,000

Earnings Per Share History

Next Fiscal Year Estimate $2.56
Dec14 $1.69
Dec13 $4.90
Dec12 $3.47
Dec11 $4.28
Dec10 $3.43
Dec09 $1.94
Dec08 $2.09
Dec07 $2.36
Dec06 $1.47
Dec05 $1.20
Dec04 $0.65
Dec03 $0.86
Dec02 $0.85
Dec01 $0.74
Dec00 $1.09
Dec99 $0.94
Dec98 $0.82
Dec97 $0.72
Dec96 $1.33
Dec95 $0.59

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.03
Dec14 $3.36
Dec13 $4.00
Dec12 $3.38
Dec11 $3.17
Dec10 $2.49
Dec09 $1.95
Dec08 $1.82
Dec07 $1.56
Dec06 $1.11
Dec05 $0.90
Dec04 $0.78
Dec03 $0.87
Dec02 $0.87
Dec01 $0.88
Dec00 $0.96
Dec99 $0.89

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Other ModernGraham posts about the company

#N/A 

Other ModernGraham posts about related companies

E I Du Pont de Nemours & Company Analysis – August 2015 Update $DD
Dow Chemical Analysis – July 2015 Update $DOW
Sigma-Aldrich Corporation Analysis – June 2015 Update $SIAL
Eastman Chemical Company Analysis – June 2015 Quarterly Update $EMN
FMC Corporation Analysis – June 2015 Quarterly Update $FMC
LyondellBassell Industries Quarterly Valuation – May 2015 $LYB
Olin Corporation Annual Valuation – 2015 $OLN
E. I. Du Pont De Nemours and Company Quarterly Valuation – May 2015 $DD
Dow Chemical Company Quarterly Valuation – April 2015 $DOW
Sigma-Aldrich Corporation Quarterly Valuation – March 2015 $SIAL

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.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

DowDuPont Inc Valuation – April 2019 #DWDP

Company Profile (excerpt from Reuters): Robert Half International Inc. is engaged in providing specialized staffing and risk consulting services. The Company provides staffing and risk consulting services through the divisions: Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal, The Creative Group and Protiviti. The Company operates through three segments: temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services. The temporary and consultant segment provides specialized staffing in the accounting and finance, administrative and office, information technology, legal, advertising, marketing and Web design fields. The permanent placement segment provides full-time personnel in the accounting, finance, administrative and office, and information technology fields. The risk consulting segment provides business and technology risk consulting and internal audit services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DWDP – April 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 $85,135,304,027 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.01 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 -8.50% Fail
6. Moderate PEmg Ratio PEmg < 20 18.84 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.90 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 2.01 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.51 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 $2.01
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $29.16
MG Value based on 0% Growth $17.10
Market Implied Growth Rate 5.17%
Current Price $37.90
% of Intrinsic Value N/A

DowDuPont Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. 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 Overvalued after seeing its EPSmg (normalized earnings) decline from $3.78 in 2015 to an estimated $2.01 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.17% 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 DowDuPont Inc revealed the company was trading above its Graham Number of $37.88. The company pays a dividend of $1.52 per share, for a yield of 4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.84, which was below the industry average of 23.27, 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 $-18.43.

DowDuPont Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.43
Graham Number $37.88
PEmg 18.84
Current Ratio 2.01
PB Ratio 0.90
Current Dividend $1.52
Dividend Yield 4.01%
Number of Consecutive Years of Dividend Growth 0

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 12/1/2018
Total Current Assets $49,603,000,000
Total Current Liabilities $24,715,000,000
Long-Term Debt $37,662,000,000
Total Assets $188,030,000,000
Intangible Assets $89,997,000,000
Total Liabilities $91,851,000,000
Shares Outstanding (Diluted Average) 2,292,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.53
Dec2018 $1.65
Dec2017 $0.91
Dec2016 $3.52
Dec2015 $6.15
Dec2014 $2.87
Dec2013 $3.68
Dec2012 $0.70
Dec2011 $2.05
Dec2010 $1.72
Dec2009 $0.32
Dec2008 $0.62
Dec2007 $2.99
Dec2006 $3.82
Dec2005 $4.62
Dec2004 $2.93
Dec2003 $1.87
Dec2002 -$0.37
Dec2001 -$0.43
Dec2000 $2.22
Dec1999 $0.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.01
Dec2018 $2.51
Dec2017 $3.10
Dec2016 $3.92
Dec2015 $3.78
Dec2014 $2.47
Dec2013 $2.07
Dec2012 $1.21
Dec2011 $1.49
Dec2010 $1.44
Dec2009 $1.69
Dec2008 $2.58
Dec2007 $3.45
Dec2006 $3.32
Dec2005 $2.62
Dec2004 $1.49
Dec2003 $0.78

Recommended Reading:

Other ModernGraham posts about the company

DowDuPont Inc Valuation – November 2018 $DWDP
DowDuPont Inc Valuation – February 2018 $DWDP

Other ModernGraham posts about related companies

Linde PLC Valuation – April 2019 #LIN
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Celanese Corporation Valuation – February 2019 $CE
Ecolab Inc Valuation – January 2019 $ECL
FMC Corp Valuation – January 2019 $FMC
Air Products & Chemicals Inc Valuation – January 2019 $APD
Albemarle Corp Valuation – January 2019 $ALB
LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP

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.

Linde PLC Valuation – April 2019 #LIN

Company Profile (excerpt from Reuters): Linde plc, incorporated on April 18, 2017, is an industrial gases and engineering company that operates through its subsidiaries. The Company provides atmospheric gases (oxygen, nitrogen, argon and rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases and acetylene). It designs, engineers and builds equipment that produces industrial gases primarily for internal use. It also offers gaseous medication and related medical products and devices for patients and medical staff. The Company serves the customers in various industries, including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LIN – April 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 $100,601,281,539 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.86 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 26.09% Fail
6. Moderate PEmg Ratio PEmg < 20 32.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.99 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 0.86 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.92 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 $5.70
MG Growth Estimate 0.33%
MG Value $52.23
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $82.69
MG Value based on 0% Growth $48.47
Market Implied Growth Rate 11.94%
Current Price $184.62
% of Intrinsic Value 353.45%

Linde PLC 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 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 Overvalued after growing its EPSmg (normalized earnings) from $5.58 in 2014 to an estimated $5.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.94% 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 Linde PLC revealed the company was trading above its Graham Number of $58.47. The company pays a dividend of $3.15 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 32.37, which was above the industry average of 23.27. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-34.09.

Linde PLC 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) -$34.09
Graham Number $58.47
PEmg 32.37
Current Ratio 0.86
PB Ratio 7.99
Current Dividend $3.15
Dividend Yield 1.71%
Number of Consecutive Years of Dividend Growth 20

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 9/1/2018
Total Current Assets $3,305,000,000
Total Current Liabilities $3,860,000,000
Long-Term Debt $6,615,000,000
Total Assets $19,979,000,000
Intangible Assets $3,714,000,000
Total Liabilities $13,244,000,000
Shares Outstanding (Diluted Average) 291,513,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.24
Dec2017 $4.32
Dec2016 $5.21
Dec2015 $5.35
Dec2014 $5.73
Dec2013 $5.87
Dec2012 $5.61
Dec2011 $5.45
Dec2010 $3.84
Dec2009 $4.01
Dec2008 $3.80
Dec2007 $3.62
Dec2006 $3.00
Dec2005 $2.20
Dec2004 $2.10
Dec2003 $1.77
Dec2002 $1.24
Dec2001 $1.31
Dec2000 $1.13
Dec1999 $1.33
Dec1998 $1.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.70
Dec2017 $5.05
Dec2016 $5.47
Dec2015 $5.60
Dec2014 $5.58
Dec2013 $5.32
Dec2012 $4.88
Dec2011 $4.39
Dec2010 $3.79
Dec2009 $3.62
Dec2008 $3.27
Dec2007 $2.84
Dec2006 $2.33
Dec2005 $1.90
Dec2004 $1.67
Dec2003 $1.42
Dec2002 $1.25

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

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PPG Industries Inc Valuation – February 2019 $PPG
Celanese Corporation Valuation – February 2019 $CE
Ecolab Inc Valuation – January 2019 $ECL
FMC Corp Valuation – January 2019 $FMC
Air Products & Chemicals Inc Valuation – January 2019 $APD
Albemarle Corp Valuation – January 2019 $ALB
LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN

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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