Alliant Energy Corp Valuation – March 2019 #LNT

Company Profile (excerpt from Reuters): Alliant Energy Corporation (Alliant Energy), incorporated on April 22, 1981, operates as a utility holding company. The Company’s segments include Utility and Non-regulated, Parent and Other. The Utility segment includes the operations of Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL), which serve retail customers in Iowa and Wisconsin. The Utility segment includes utility electric operations, utility gas operations and utility other, which includes steam operations and the unallocated portions of the utility business. The Company’s Non-regulated, Parent and Other segment includes the operations of Alliant Energy Resources, LLC (Resources) and its subsidiaries; Alliant Energy Corporate Services, Inc. (Corporate Services); the Alliant Energy parent company, and any Alliant Energy parent company consolidating adjustments. As of December 31, 2016, the Company was focused on providing regulated electric and natural gas service to approximately 960,000 electric and approximately 410,000 natural gas customers in the Midwest through its two public utility subsidiaries, IPL and WPL.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LNT – 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 $11,189,931,660 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.48 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 55.77% Pass
6. Moderate PEmg Ratio PEmg < 20 23.05 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.33 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 0.48 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.11 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 Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.06
MG Growth Estimate 3.94%
MG Value $33.68
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $29.81
MG Value based on 0% Growth $17.48
Market Implied Growth Rate 7.28%
Current Price $47.40
% of Intrinsic Value 140.75%

Alliant Energy 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, high PEmg ratio. 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 $1.63 in 2015 to an estimated $2.06 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.28% 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 Alliant Energy Corporation revealed the company was trading above its Graham Number of $31.22. The company pays a dividend of $1.34 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 23.05, which was below the industry average of 23.71, 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 $-41.81.

Alliant Energy Corporation 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) -$41.81
Graham Number $31.22
PEmg 23.05
Current Ratio 0.48
PB Ratio 2.33
Current Dividend $1.34
Dividend Yield 2.83%
Number of Consecutive Years of Dividend Growth 15

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 $785,100,000
Total Current Liabilities $1,644,100,000
Long-Term Debt $5,246,300,000
Total Assets $15,426,000,000
Intangible Assets $0
Total Liabilities $10,640,300,000
Shares Outstanding (Diluted Average) 235,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.23
Dec2018 $2.19
Dec2017 $1.99
Dec2016 $1.64
Dec2015 $1.68
Dec2014 $1.73
Dec2013 $1.62
Dec2012 $1.45
Dec2011 $1.37
Dec2010 $1.30
Dec2009 $0.51
Dec2008 $1.31
Dec2007 $1.89
Dec2006 $1.35
Dec2005 -$0.04
Dec2004 $0.64
Dec2003 $0.91
Dec2002 $0.59
Dec2001 $1.07
Dec2000 $2.52
Dec1999 $1.26

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.06
Dec2018 $1.93
Dec2017 $1.78
Dec2016 $1.65
Dec2015 $1.63
Dec2014 $1.57
Dec2013 $1.40
Dec2012 $1.26
Dec2011 $1.20
Dec2010 $1.17
Dec2009 $1.07
Dec2008 $1.25
Dec2007 $1.13
Dec2006 $0.73
Dec2005 $0.49
Dec2004 $0.88
Dec2003 $1.09

Recommended Reading:

Other ModernGraham posts about the company

Alliant Energy Corp Valuation – June 2018 $LNT
Alliant Energy Corp Valuation – Initial Coverage $LNT

Other ModernGraham posts about related companies

Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE
Ameren Corp Valuation – March 2019 #AEE
NextEra Energy Inc Valuation – February 2019 $NEE
Dominion Energy Inc Valuation – February 2019 $D
Exelon Corp Valuation – January 2019 $EXC
NRG Energy Inc Valuation – January 2019 $NRG
DTE Energy Co Valuation – January 2019 $DTE
AES Corp Valuation – January 2019 $AES

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.

Alliance Data Systems Corp Valuation – March 2019 #ADS

Company Profile (excerpt from Reuters): Alliance Data Systems Corporation, incorporated on February 23, 1995, is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty Group B.V. (BrandLoyalty); Epsilon, which provides end-to-end, integrated direct marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs. Its client base is diversified across a range of end-markets, including financial services, specialty retail, grocery and drugstore chains, petroleum retail, automotive, hospitality and travel, telecommunications, insurance and healthcare.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADS – 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 $9,070,607,376 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.15 Pass
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 232.37% Pass
6. Moderate PEmg Ratio PEmg < 20 10.89 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.97 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 2.15 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.80 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 $15.71
MG Growth Estimate 15.00%
MG Value $604.68
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $227.74
MG Value based on 0% Growth $133.50
Market Implied Growth Rate 1.19%
Current Price $171.03
% of Intrinsic Value 28.28%

Alliance Data Systems Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the poor dividend history. 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 $7.77 in 2015 to an estimated $15.71 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.19% 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 Alliance Data Systems Corporation revealed the company was trading above its Graham Number of $138.66. The company pays a dividend of $2.28 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 10.89, which was below the industry average of 32.74, 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 $-61.7.

Alliance Data Systems Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$61.70
Graham Number $138.66
PEmg 10.89
Current Ratio 2.15
PB Ratio 3.97
Current Dividend $2.28
Dividend Yield 1.33%
Number of Consecutive Years of Dividend Growth 3

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 $24,711,700,000
Total Current Liabilities $11,484,000,000
Long-Term Debt $10,527,500,000
Total Assets $30,387,700,000
Intangible Assets $4,380,700,000
Total Liabilities $28,055,600,000
Shares Outstanding (Diluted Average) 54,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $19.96
Dec2018 $17.49
Dec2017 $14.10
Dec2016 $7.34
Dec2015 $8.85
Dec2014 $7.87
Dec2013 $7.42
Dec2012 $6.58
Dec2011 $5.45
Dec2010 $3.48
Dec2009 $2.49
Dec2008 $2.80
Dec2007 $2.03
Dec2006 $2.32
Dec2005 $1.64
Dec2004 $1.22
Dec2003 $0.84
Dec2002 $0.31
Dec2001 -$0.21
Dec2000 -$0.60
Dec1999 -$0.70

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $15.71
Dec2018 $12.76
Dec2017 $9.97
Dec2016 $7.81
Dec2015 $7.77
Dec2014 $6.88
Dec2013 $5.95
Dec2012 $4.86
Dec2011 $3.75
Dec2010 $2.81
Dec2009 $2.40
Dec2008 $2.24
Dec2007 $1.84
Dec2006 $1.59
Dec2005 $1.07
Dec2004 $0.62
Dec2003 $0.19

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Stocks for the Enterprising Investor – January 2019
Most Undervalued Stocks of the S&P 500 – August 2018
5 Undervalued Stocks for Value Investors with a High Beta – July 2018
Alliance Data Systems Corp Valuation – May 2018 $ADS
14 Best Stocks for Value Investors This Week – 2/11/17

Other ModernGraham posts about related companies

IHS Markit Ltd Valuation – February 2019 $INFO
Automatic Data Processing Inc Valuation – February 2019 $ADP
Fiserv Inc Valuation – February 2019 $FISV
Rollins Inc Valuation – February 2019 $ROL
Iron Mountain Inc Valuation – February 2019 $IRM
Cintas Corp Valuation – February 2019 $CTAS
Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT

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.

Halliburton Co Valuation – March 2019 #HAL

Company Profile (excerpt from Reuters): Halliburton Company, incorporated on November 7, 1996, is a provider of services and products to the upstream oil and natural gas industry throughout the lifecycle of the reservoir, from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the field. The Company operates through two segments: the Completion and Production segment, and the Drilling and Evaluation segment. The Completion and Production segment delivers cementing, stimulation, intervention, pressure control, specialty chemicals, artificial lift and completion services. The Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation and wellbore placement solutions that enable customers to model, measure, drill and optimize their well construction activities.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HAL – 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 $26,987,755,256 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.32 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 -70.87% Fail
6. Moderate PEmg Ratio PEmg < 20 -134.48 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.83 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 2.32 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.64 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 -$0.23
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$3.34
MG Value based on 0% Growth -$1.96
Market Implied Growth Rate -71.49%
Current Price $30.93
% of Intrinsic Value N/A

Halliburton Company 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 stability or 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 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 $1.89 in 2015 to an estimated $-0.23 for 2019. This level of negative earnings does not support a positive valuation.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 Halliburton Company revealed the company was trading above its Graham Number of $15.24. The company pays a dividend of $0.72 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -134.48, which was below the industry average of 58.42, 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 $-6.06.

Halliburton Company 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) -$6.06
Graham Number $15.24
PEmg -134.48
Current Ratio 2.32
PB Ratio 2.83
Current Dividend $0.72
Dividend Yield 2.33%
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 $11,151,000,000
Total Current Liabilities $4,802,000,000
Long-Term Debt $10,421,000,000
Total Assets $25,982,000,000
Intangible Assets $2,825,000,000
Total Liabilities $16,438,000,000
Shares Outstanding (Diluted Average) 872,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.95
Dec2018 $1.89
Dec2017 -$0.53
Dec2016 -$6.69
Dec2015 -$0.79
Dec2014 $4.11
Dec2013 $2.36
Dec2012 $2.84
Dec2011 $3.08
Dec2010 $2.01
Dec2009 $1.27
Dec2008 $2.45
Dec2007 $3.68
Dec2006 $2.23
Dec2005 $2.27
Dec2004 -$1.12
Dec2003 -$0.95
Dec2002 -$1.16
Dec2001 $0.94
Dec2000 $0.56
Dec1999 $0.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.23
Dec2018 -$0.68
Dec2017 -$1.41
Dec2016 -$1.11
Dec2015 $1.89
Dec2014 $3.11
Dec2013 $2.51
Dec2012 $2.50
Dec2011 $2.39
Dec2010 $2.14
Dec2009 $2.26
Dec2008 $2.47
Dec2007 $2.06
Dec2006 $0.92
Dec2005 $0.18
Dec2004 -$0.70
Dec2003 -$0.33

Recommended Reading:

Other ModernGraham posts about the company

Halliburton Co Valuation – May 2018 $HAL
Most Overvalued Stocks of the S&P 500 – March 2017
Halliburton Company Valuation – January 2017 $HAL
Halliburton Company Analysis – September 2015 Update $HAL
Halliburton Company Analysis – June 2015 Update $HAL

Other ModernGraham posts about related companies

Kinder Morgan Inc Valuation – February 2019 $KMI
National Oilwell Varco Inc Valuation – February 2019 $NOV
Diamondback Energy Inc Valuation – February 2019 $FANG
TechnipFMC PLC Valuation – February 2019 $FTI
Marathon Petroleum Corp Valuation – February 2019 $MPC
Baker Hughes, a GE Co Valuation – February 2019 $BHGE
EOG Resources Inc Valuation – February 2019 $EOG
ConocoPhillips Valuation – February 2019 $COP
Devon Energy Corp Valuation – January 2019 $DVN
Noble Energy Inc Valuation – January 2019 $NBL

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.

Allegion PLC Valuation – February 2019 $ALLE

Company Profile (excerpt from Reuters): Allegion Public Limited Company, incorporated on May 9, 2013, is a provider of security products and solutions. The Company offers a portfolio of mechanical and electronic security products across a range of brands. Its segments include Americas; Europe, Middle East, India and Africa (EMEIA), and Asia Pacific. Its products include door closers and controls; door and door frames (steel); electronic security products; electronic and biometric access control systems; exit devices; locks, locksets, portable locks and key systems; time, attendance and workforce productivity systems, and other accessories. The Company sells a range of security products and solutions for end users in commercial, institutional and residential facilities across the world, including into the education, healthcare, government, hospitality, commercial office and single and multi-family residential markets. As of December 31, 2016, it manufactured and sold mechanical and electronic security products and solutions in approximately 130 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALLE – February 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 $8,399,205,187 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.79 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
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 40600.00% Pass
6. Moderate PEmg Ratio PEmg < 20 23.36 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.97 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 1.79 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.43 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 $3.81
MG Growth Estimate 15.00%
MG Value $146.61
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $55.22
MG Value based on 0% Growth $32.37
Market Implied Growth Rate 7.43%
Current Price $88.94
% of Intrinsic Value 60.67%

Allegion PLC 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 stability over the last ten years, and the poor dividend history, 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 Undervalued after growing its EPSmg (normalized earnings) from $1.08 in 2015 to an estimated $3.81 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.43% 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 Allegion PLC revealed the company was trading above its Graham Number of $27.16. The company pays a dividend of $0.84 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 23.36, which was below the industry average of 24.89, 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 $-12.84.

Allegion PLC performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$12.84
Graham Number $27.16
PEmg 23.36
Current Ratio 1.79
PB Ratio 12.97
Current Dividend $0.84
Dividend Yield 0.94%
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 12/1/2018
Total Current Assets $931,600,000
Total Current Liabilities $520,800,000
Long-Term Debt $1,409,500,000
Total Assets $2,810,200,000
Intangible Assets $1,430,100,000
Total Liabilities $2,156,200,000
Shares Outstanding (Diluted Average) 95,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.82
Dec2018 $4.54
Dec2017 $2.85
Dec2016 $2.36
Dec2015 $1.59
Dec2014 $1.80
Dec2013 $0.34

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.81
Dec2018 $3.08
Dec2017 $2.16
Dec2016 $1.62
Dec2015 $1.08
Dec2014 $0.69
Dec2013 $0.11

Recommended Reading:

Other ModernGraham posts about the company

5 Companies for Enterprising Investors Near 52 Week Lows – July 2018
Allegion PLC Valuation – May 2018 $ALLE
Allegion PLC Valuation – January 2017 $ALLE
Allegion PLC Valuation – August 2016 $ALLE
26 Best Stocks For Value Investors This Week – 2/6/16

Other ModernGraham posts about related companies

Arconic Inc Valuation – February 2019 $ARNC
Roper Technologies Inc Valuation – February 2019 $ROP
Rockwell Automation Inc Valuation – February 2019 $ROK
Eaton Corp PLC Valuation – January 2019 $ETN
Fastenal Co Valuation – January 2019 $FAST
Deere & Co Valuation – January 2019 $DE
A.O. Smith Corp Valuation – January 2019 $AOS
Parker-Hannifin Corp Valuation – January 2019 $PH
Dover Corp Valuation – January 2019 $DOV
Caterpillar Inc Valuation – November 2018 $CAT

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.

Allergan PLC Valuation – February 2019 $AGN

Company Profile (excerpt from Reuters): Allergan plc, incorporated on May 16, 2013, is a specialty pharmaceutical company. The Company is engaged in the development, manufacturing, marketing and distribution of brand name pharmaceutical products, medical aesthetics, biosimilar and over-the-counter (OTC) pharmaceutical products. The Company operates through three segments: US Specialized Therapeutics, US General Medicine and International. The US Specialized Therapeutics segment includes sales relating to branded products within the United States, including Medical Aesthetics, Medical Dermatology, Eye Care, Neurosciences and Urology therapeutic products. The US General Medicine segment includes sales relating to branded products within the United States that do not fall into the US Specialized Therapeutics business units, including Central Nervous System, Gastrointestinal, Women’s Health, Anti-Infectives and Diversified Brands. The International segment includes sales relating to products sold outside the United States. Within its US Specialized Therapeutics, US General Medicine and International operations, the Company sells its brand and aesthetic pharmaceutical products primarily to drug wholesalers, retailers and distributors, including national retail drug and food store chains, hospitals, clinics, mail-order retailers, government agencies and managed healthcare providers, such as health maintenance organizations and other institutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AGN – February 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 $45,604,760,587 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.13 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
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 -392.79% Fail
6. Moderate PEmg Ratio PEmg < 20 31.61 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.71 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 1.13 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 30.67 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 Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.34
MG Growth Estimate 15.00%
MG Value $166.99
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $62.89
MG Value based on 0% Growth $36.87
Market Implied Growth Rate 11.56%
Current Price $137.11
% of Intrinsic Value 82.11%

Allergan 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 stability or growth over the last ten years, and the poor dividend history, 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.54 in 2015 to an estimated $4.34 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 11.56% 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 Allergan plc revealed the company was trading below its Graham Number of $262.47. The company pays a dividend of $2.88 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 31.61, which was below the industry average of 39.51, 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 $-90.04.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$90.04
Graham Number $262.47
PEmg 31.61
Current Ratio 1.13
PB Ratio 0.71
Current Dividend $2.88
Dividend Yield 2.10%
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 12/1/2018
Total Current Assets $6,475,400,000
Total Current Liabilities $5,727,900,000
Long-Term Debt $22,929,400,000
Total Assets $101,787,600,000
Intangible Assets $89,608,700,000
Total Liabilities $36,656,600,000
Shares Outstanding (Diluted Average) 335,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $15.86
Dec2018 -$15.26
Dec2017 -$13.19
Dec2016 $38.18
Dec2015 $10.01
Dec2014 -$7.42
Dec2013 -$5.27
Dec2012 $0.76
Dec2011 $2.06
Dec2010 $1.48
Dec2009 $1.96
Dec2008 $2.09
Dec2007 $1.27
Dec2006 -$4.37
Dec2005 $1.22
Dec2004 $1.26
Dec2003 $1.74
Dec2002 $1.62
Dec2001 $1.07
Dec2000 $1.52
Dec1999 $1.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.34
Dec2018 -$0.13
Dec2017 $6.45
Dec2016 $13.26
Dec2015 $0.54
Dec2014 -$3.35
Dec2013 -$0.81
Dec2012 $1.50
Dec2011 $1.84
Dec2010 $1.31
Dec2009 $0.96
Dec2008 $0.41
Dec2007 -$0.21
Dec2006 -$0.54
Dec2005 $1.38
Dec2004 $1.45
Dec2003 $1.55

Recommended Reading:

Other ModernGraham posts about the company

Allergan PLC Valuation – May 2018 $AGN
Allergan plc Valuation – January 2017 $AGN
Allergan PLC Analysis – August 2015 Update $AGN
34 Companies in the Spotlight This Week – 2/7/15
Allergan Inc. Quarterly Valuation – February 2015 $AGN

Other ModernGraham posts about related companies

Incyte Corp Valuation – February 2019 $INCY
Regeneron Pharmaceuticals Inc Valuation – February 2019 $REGN
Alexion Pharmaceuticals Inc Valuation – February 2019 $ALXN
Vertex Pharmaceuticals Inc Valuation – February 2019 $VRTX
Perrigo Company Valuation – February 2019 $PRGO
Eli Lilly and Co Valuation – January 2019 $LLY
Zoetis Inc Valuation – January 2019 $ZTS
Gilead Sciences Inc Valuation – January 2019 $GILD
Pfizer Inc Valuation – November 2018 $PFE
Nektar Therapeutics Valuation – November 2018 $NKTR

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.

Arthur J Gallagher & Co Valuation – February 2019 $AJG

Company Profile (excerpt from Reuters): Arthur J. Gallagher & Co., incorporated on March 30, 1972, is engaged in providing insurance brokerage and consulting services, and third-party claims settlement and administration services to both domestic and international entities. The Company operates through three segments: brokerage, risk management and corporate. As of December 31, 2016, the Company operated primarily as a retail commercial property and casualty broker throughout more than 35 locations in Australia, 35 locations in Canada and 25 locations in New Zealand. As of December 31, 2016, in the United Kingdom, the Company operated as a retail broker from approximately 100 locations. The Company also has an underwriting operation for clients to access Lloyd’s of London and other international insurance markets, and a program operation offering risk management products and services to the United Kingdom public entities. In Bermuda, the Company acts principally as a wholesaler for clients looking to access the Bermuda insurance markets and also provides services relating to the formation and management of offshore captive insurance companies. As of December 31, 2016, through its global network of correspondent insurance brokers and consultants, the Company served its clients’ coverage and serviced needs in more than 150 countries around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AJG – February 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,824,192,568 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 116.11% Pass
5. Moderate PEmg Ratio PEmg < 20 25.83 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.31 Fail
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 $3.12
MG Growth Estimate 9.34%
MG Value $84.76
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $45.21
MG Value based on 0% Growth $26.50
Market Implied Growth Rate 8.67%
Current Price $80.54
% of Intrinsic Value 95.02%

Arthur J Gallagher & Co 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.92 in 2015 to an estimated $3.12 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 8.67% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Arthur J Gallagher & Co revealed the company was trading above its Graham Number of $45.42. The company pays a dividend of $1.64 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 25.83, which was below the industry average of 32.96, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Arthur J Gallagher & Co performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $45.42
PEmg 25.83
PB Ratio 3.31
Dividend Yield 2.04%
TTM Dividend $1.64
Number of Consecutive Years of Dividend Growth 8

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
Long-Term Debt & Capital Lease Obligation $3,091,400,000
Total Assets $16,334,000,000
Intangible Assets $6,398,600,000
Total Liabilities $11,764,300,000
Shares Outstanding (Diluted Average) 187,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.75
Dec2018 $3.40
Dec2017 $2.64
Dec2016 $2.22
Dec2015 $2.06
Dec2014 $1.97
Dec2013 $2.06
Dec2012 $1.59
Dec2011 $1.28
Dec2010 $1.66
Dec2009 $1.28
Dec2008 $0.82
Dec2007 $1.43
Dec2006 $1.31
Dec2005 $0.32
Dec2004 $1.99
Dec2003 $1.57
Dec2002 $1.41
Dec2001 $1.39
Dec2000 $1.04
Dec1999 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.12
Dec2018 $2.69
Dec2017 $2.28
Dec2016 $2.06
Dec2015 $1.92
Dec2014 $1.81
Dec2013 $1.67
Dec2012 $1.43
Dec2011 $1.33
Dec2010 $1.34
Dec2009 $1.13
Dec2008 $1.09
Dec2007 $1.26
Dec2006 $1.22
Dec2005 $1.23
Dec2004 $1.62
Dec2003 $1.37

Recommended Reading:

Other ModernGraham posts about the company

Arthur J Gallagher & Co Valuation – April 2018 $AJG
Arthur J Gallagher & Co Valuation – December 2016 $AJG
Arthur J Gallagher & Company Analysis – Initial Coverage $AJG

Other ModernGraham posts about related companies

Brighthouse Financial Inc Valuation – February 2019 $BHF
Allstate Corp Valuation – February 2019 $ALL
Hartford Financial Services Group Inc Valuation – February 2019 $HIG
Unum Group Valuation – February 2019 $UNM
Everest Re Group Ltd Valuation – February 2019 $RE
Cigna Corp Valuation – January 2019 $CI
MetLife Inc Valuation – January 2019 $MET
Aflac Inc Valuation – January 2019 $AFL
Principal Financial Group Inc Valuation – January 2019 $PFG
Progressive Corp Valuation – January 2019 $PGR

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.

Ball Corporation Valuation – February 2019 $BLL

Company Profile (excerpt from Reuters): Ball Corporation (Ball), incorporated on December 19, 1922, is a supplier of metal packaging to the beverage, food, personal care and household products industries. The Company’s packaging products are produced for a range of end uses and are manufactured in facilities around the world. Its segments include beverage packaging, North and Central America; beverage packaging, South America; beverage packaging, Europe; food and aerosol packaging; aerospace, and other. Its major product line is aluminum and steel beverage containers. It also produces steel food, aerosol containers, extruded aluminum aerosol containers and aluminum slugs. It sells its packaging products to multinational beverage, food, personal care and household products companies. Its aerospace business is engaged in the design, development and manufacture of aerospace systems for civil, commercial and national cyber security aerospace markets. It produces spacecraft, instruments and sensors, radio frequency systems and components, data exploitation solutions and a range of aerospace technologies and products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BLL – February 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 $18,465,563,018 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 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 20.83% Fail
6. Moderate PEmg Ratio PEmg < 20 36.45 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.30 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 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -42.00 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 $1.50
MG Growth Estimate 2.25%
MG Value $19.42
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $21.68
MG Value based on 0% Growth $12.71
Market Implied Growth Rate 13.97%
Current Price $54.50
% of Intrinsic Value 280.58%

Ball 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. 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 $1.3 in 2015 to an estimated $1.5 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.97% 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 Ball Corporation revealed the company was trading above its Graham Number of $23.31. The company pays a dividend of $0.4 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 36.45, which was above the industry average of 17.32. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.14.

Ball Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.14
Graham Number $23.31
PEmg 36.45
Current Ratio 0.96
PB Ratio 5.30
Current Dividend $0.40
Dividend Yield 0.73%
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 12/1/2018
Total Current Assets $3,940,000,000
Total Current Liabilities $4,095,000,000
Long-Term Debt $6,510,000,000
Total Assets $16,554,000,000
Intangible Assets $6,663,000,000
Total Liabilities $12,992,000,000
Shares Outstanding (Diluted Average) 346,274,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.30
Dec2018 $1.29
Dec2017 $1.05
Dec2016 $0.81
Dec2015 $1.00
Dec2014 $1.65
Dec2013 $1.37
Dec2012 $1.25
Dec2011 $1.32
Dec2010 $1.28
Dec2009 $1.02
Dec2008 $0.83
Dec2007 $0.69
Dec2006 $0.79
Dec2005 $0.62
Dec2004 $0.66
Dec2003 $0.50
Dec2002 $0.34
Dec2001 -$0.12
Dec2000 $0.03
Dec1999 $0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.50
Dec2018 $1.12
Dec2017 $1.08
Dec2016 $1.13
Dec2015 $1.30
Dec2014 $1.42
Dec2013 $1.29
Dec2012 $1.21
Dec2011 $1.14
Dec2010 $1.01
Dec2009 $0.84
Dec2008 $0.74
Dec2007 $0.68
Dec2006 $0.65
Dec2005 $0.52
Dec2004 $0.41
Dec2003 $0.25

Recommended Reading:

Other ModernGraham posts about the company

Ball Corporation Valuation – April 2018 $BLL
Ball Corporation Valuation – December 2016 $BLL
Ball Corporation Analysis – 2015 Update $BLL
19 Companies in the Spotlight This Week – 8/9/14
Ball Corporation Annual Valuation – 2014 $BLL

Other ModernGraham posts about related companies

Westrock Co Valuation – February 2019 $WRK
Sealed Air Corp Valuation – February 2019 $SEE
Packaging Corp of America Valuation – January 2019 $PKG
Schweitzer-Mauduit International Inc Valuation – September 2018 $SWM
KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP
Bemis Co Inc Valuation – June 2018 $BMS

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.

Allstate Corp Valuation – February 2019 $ALL

Company Profile (excerpt from Reuters): The Allstate Corporation (Allstate), incorporated on November 5, 1992, is a holding company for Allstate Insurance Company. The Company’s business is conducted principally through Allstate Insurance Company, Allstate Life Insurance Company and other subsidiaries. The Company is engaged in the property-liability insurance business and the life insurance, retirement and investment products business. Its segments include Allstate Protection, Allstate Financial, Discontinued Lines and Coverages, and Corporate and Other. The Company offers its products in the United States and Canada.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALL – February 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $32,508,453,889 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 190.33% Pass
5. Moderate PEmg Ratio PEmg < 20 13.38 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.54 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 $7.05
MG Growth Estimate 5.99%
MG Value $144.44
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $102.28
MG Value based on 0% Growth $59.96
Market Implied Growth Rate 2.44%
Current Price $94.38
% of Intrinsic Value 65.34%

Allstate Corp 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 $5.04 in 2015 to an estimated $7.05 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.44% 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 Allstate Corp revealed the company was trading below its Graham Number of $105.68. The company pays a dividend of $1.84 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 13.38, which was below the industry average of 32.96, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Allstate Corp fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Graham Number $105.68
PEmg 13.38
PB Ratio 1.54
Dividend Yield 1.95%
TTM Dividend $1.84
Number of Consecutive Years of Dividend Growth 8

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
Long-Term Debt & Capital Lease Obligation $6,451,000,000
Total Assets $112,249,000,000
Intangible Assets $2,530,000,000
Total Liabilities $90,937,000,000
Shares Outstanding (Diluted Average) 347,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.50
Dec2018 $5.96
Dec2017 $8.36
Dec2016 $4.67
Dec2015 $5.05
Dec2014 $6.27
Dec2013 $4.81
Dec2012 $4.68
Dec2011 $1.50
Dec2010 $1.68
Dec2009 $1.58
Dec2008 -$3.06
Dec2007 $7.77
Dec2006 $7.84
Dec2005 $2.64
Dec2004 $4.54
Dec2003 $3.83
Dec2002 $1.60
Dec2001 $1.60
Dec2000 $2.95
Dec1999 $3.38

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.05
Dec2018 $6.24
Dec2017 $6.20
Dec2016 $5.11
Dec2015 $5.04
Dec2014 $4.62
Dec2013 $3.48
Dec2012 $2.30
Dec2011 $1.37
Dec2010 $1.93
Dec2009 $2.49
Dec2008 $3.27
Dec2007 $6.07
Dec2006 $4.84
Dec2005 $3.18
Dec2004 $3.26
Dec2003 $2.64

Recommended Reading:

Other ModernGraham posts about the company

Allstate Corp Valuation – April 2018 $ALL
Allstate Corp Valuation – November 2016 $ALL
10 Best Stocks For Value Investors This Week – 5/21/16
Allstate Corporation Valuation – May 2016 $ALL
10 Best Stocks For Value Investors This Week – 10/31/15

Other ModernGraham posts about related companies

Hartford Financial Services Group Inc Valuation – February 2019 $HIG
Unum Group Valuation – February 2019 $UNM
Everest Re Group Ltd Valuation – February 2019 $RE
Cigna Corp Valuation – January 2019 $CI
MetLife Inc Valuation – January 2019 $MET
Aflac Inc Valuation – January 2019 $AFL
Principal Financial Group Inc Valuation – January 2019 $PFG
Progressive Corp Valuation – January 2019 $PGR
Lincoln National Corp Valuation – January 2019 $LNC
Cincinnati Financial Corp Valuation – January 2019 $CINF

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.

Huntington Ingalls Industries Inc Valuation – February 2019 $HII

Company Profile (excerpt from Reuters): Huntington Ingalls Industries, Inc., incorporated on August 4, 2010, is a military shipbuilding company and a provider of professional services to partners in government and industry. The Company’s business consists of the design, construction, repair and maintenance of nuclear-powered ships and non-nuclear ships for the United States Navy and coastal defense surface ships for the United States Coast Guard, as well as the refueling and overhaul and inactivation of nuclear-powered ships for the United States Navy. The Company operates through three segments: Ingalls Shipbuilding (Ingalls), Newport News Shipbuilding (Newport News) and Technical Solutions. The Company’s Ingalls segment includes its non-nuclear ship design, construction, repair and maintenance businesses. The Company’s Newport News includes all of its nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. The Company’s Technical Solutions segment provides a range of professional services, including fleet support, integrated missions solutions, and nuclear and environmental and oil and gas services, to the governmental, energy, and oil and gas markets. The Company conducts majority of its business with the United States Government, principally the Department of Defense (DoD).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HII – February 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 $9,109,897,923 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.14 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
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 6282.54% Pass
6. Moderate PEmg Ratio PEmg < 20 17.17 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.16 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 1.14 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.62 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 $12.66
MG Growth Estimate 15.00%
MG Value $487.38
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $183.56
MG Value based on 0% Growth $107.60
Market Implied Growth Rate 4.34%
Current Price $217.42
% of Intrinsic Value 44.61%

Huntington Ingalls Industries Inc 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 over the last ten years, and the poor dividend history, and the high PB ratio. 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 $4.16 in 2014 to an estimated $12.66 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.34% 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 above the price.

At the time of valuation, further research into Huntington Ingalls Industries Inc revealed the company was trading above its Graham Number of $124.28. The company pays a dividend of $2.52 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 17.17, which was below the industry average of 53.93, 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 $-58.08.

Huntington Ingalls Industries 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) -$58.08
Graham Number $124.28
PEmg 17.17
Current Ratio 1.14
PB Ratio 5.16
Current Dividend $2.52
Dividend Yield 1.16%
Number of Consecutive Years of Dividend Growth 6

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 $1,859,000,000
Total Current Liabilities $1,631,000,000
Long-Term Debt $1,282,000,000
Total Assets $6,199,000,000
Intangible Assets $1,697,000,000
Total Liabilities $4,374,000,000
Shares Outstanding (Diluted Average) 43,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $17.61
Dec2017 $10.46
Dec2016 $12.14
Dec2015 $8.36
Dec2014 $6.86
Dec2013 $5.18
Dec2012 $2.91
Dec2011 -$2.05
Dec2010 $2.68

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $12.66
Dec2017 $9.66
Dec2016 $8.53
Dec2015 $5.90
Dec2014 $4.16
Dec2013 $2.45
Dec2012 $0.96
Dec2011 $0.03
Dec2010 $0.89

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

L3 Technologies Inc Valuation – January 2019 $LLL
Textron Inc Valuation – January 2019 $TXT
Lockheed Martin Corp Valuation – January 2019 $LMT
United Technologies Corp Valuation – November 2018 $UTX
Boeing Co Valuation – November 2018 $BA
Axon Enterprises Inc Valuation – October 2018 $AAXN
Cubic Corp Valuation – September 2018 $CUB
KLX Inc Valuation – August 2018 $KLXI
Kaman Corp Valuation – August 2018 $KAMN
Raytheon Co Valuation – June 2018 $RTN

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.

Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

Company Profile (excerpt from Reuters): Walgreens Boots Alliance, Inc., incorporated on September 2, 2014, is a holding company. The Company is a pharmacy-led health and wellbeing company. The Company along with equity method investments, has approximately 18,500 stores in 11 countries also has pharmaceutical wholesale and distribution networks with more than 390 distribution centers delivering to more than 230,000 pharmacies, doctors, health centers and hospitals each year in more than 20 countries. The Company operates through three segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Retail Pharmacy USA segment consists of the Walgreen Co. (Walgreens) business, which includes the operation of retail drugstores, care clinics and providing specialty pharmacy services. The Retail Pharmacy International segment consists primarily of the Alliance Boots pharmacy-led health and beauty stores, optical practices and related contract manufacturing operations. The Pharmaceutical Wholesale segment consists of the Alliance Boots pharmaceutical wholesaling and distribution businesses. The Company’s portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as global health and beauty product brands, including No7, Botanics, Liz Earle and Soap & Glory.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WBA – December 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 $72,797,457,454 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.82 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 97.99% Pass
6. Moderate PEmg Ratio PEmg < 20 15.80 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.82 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 0.82 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.25 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 $4.87
MG Growth Estimate 10.03%
MG Value $139.17
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $70.64
MG Value based on 0% Growth $41.41
Market Implied Growth Rate 3.65%
Current Price $76.97
% of Intrinsic Value 55.30%

Walgreens Boots Alliance Inc 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. 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 $2.92 in 2015 to an estimated $4.87 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.65% 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 Walgreens Boots Alliance Inc revealed the company was trading above its Graham Number of $60.62. The company pays a dividend of $1.64 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15.8, which was below the industry average of 28.23, 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 $-24.11.

Walgreens Boots Alliance Inc performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.11
Graham Number $60.62
PEmg 15.80
Current Ratio 0.82
PB Ratio 2.82
Current Dividend $1.64
Dividend Yield 2.13%
Number of Consecutive Years of Dividend Growth 15

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 8/1/2018
Total Current Assets $17,846,000,000
Total Current Liabilities $21,667,000,000
Long-Term Debt $12,431,000,000
Total Assets $68,124,000,000
Intangible Assets $28,697,000,000
Total Liabilities $41,435,000,000
Shares Outstanding (Diluted Average) 978,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.98
Aug2018 $5.05
Aug2017 $3.78
Aug2016 $3.82
Aug2015 $4.00
Aug2014 $2.00
Aug2013 $2.67
Aug2012 $2.42
Aug2011 $2.94
Aug2010 $2.12
Aug2009 $2.02
Aug2008 $2.17
Aug2007 $2.03
Aug2006 $1.72
Aug2005 $1.52
Aug2004 $1.31
Aug2003 $1.13
Aug2002 $0.99
Aug2001 $0.86
Aug2000 $0.76
Aug1999 $0.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.87
Aug2018 $4.12
Aug2017 $3.52
Aug2016 $3.26
Aug2015 $2.92
Aug2014 $2.40
Aug2013 $2.54
Aug2012 $2.43
Aug2011 $2.37
Aug2010 $2.06
Aug2009 $1.99
Aug2008 $1.90
Aug2007 $1.69
Aug2006 $1.46
Aug2005 $1.27
Aug2004 $1.10
Aug2003 $0.96

Recommended Reading:

Other ModernGraham posts about the company

Walgreens Boots Alliance Inc Valuation – March 2018 $WBA
Walgreens Boots Alliance Inc Valuation – July 2016 $WBA
47 Companies in the Spotlight This Week – 5/16/15
Walgreens Boots Alliance Inc. Annual Valuation – 2015 $WBA
40 Companies in the Spotlight This Week – 2/21/15

Other ModernGraham posts about related companies

Nordstrom Inc Valuation – December 2018 $JWN
Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN
Fossil Group Inc Valuation – June 2018 $FOSL
Costco Wholesale Corp Valuation – June 2018 $COST
Lumber Liquidators Holdings Inc Valuation – June 2018 $LL
CVS Health Corp Valuation – June 2018 $CVS

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.

Back To Top