American Express Co Valuation – April 2019 #AXP

Company Profile (excerpt from Reuters): American Express Company, incorporated on June 10, 1965, together with its subsidiaries, is a global services company. The Company’s principal products and services are charge and credit card products, and travel-related services offered to consumers and businesses around the world. The Company’s segments include the Global Consumer Services Group (GCSG), Global Merchant and Network Services (GMNS), and Global Commercial Services (GCS). The Company’s range of products and services includes network services; merchant acquisition and processing, servicing and settlement, and point-of-sale marketing and information products and services for merchants; other fee services, including fraud prevention services and the design and operation of customer loyalty programs; expense management products and services, and stored value/prepaid products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AXP – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $93,000,342,672 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 83.98% Pass
5. Moderate PEmg Ratio PEmg < 20 15.56 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.24 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 $7.13
MG Growth Estimate 6.66%
MG Value $155.42
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $103.32
MG Value based on 0% Growth $60.57
Market Implied Growth Rate 3.53%
Current Price $110.86
% of Intrinsic Value 71.33%

American Express Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PB ratio. 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 Undervalued after growing its EPSmg (normalized earnings) from $4.94 in 2015 to an estimated $7.13 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.53% 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 American Express Company revealed the company was trading above its Graham Number of $76.95. The company pays a dividend of $1.48 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 15.56, which was below the industry average of 21.66, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

American Express Company performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $76.95
PEmg 15.56
PB Ratio 4.24
Dividend Yield 1.34%
TTM Dividend $1.48
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
Long-Term Debt & Capital Lease Obligation $58,423,000,000
Total Assets $188,602,000,000
Intangible Assets $3,347,000,000
Total Liabilities $166,312,000,000
Shares Outstanding (Diluted Average) 853,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.00
Dec2018 $7.91
Dec2017 $2.99
Dec2016 $5.61
Dec2015 $5.05
Dec2014 $5.56
Dec2013 $4.88
Dec2012 $3.89
Dec2011 $4.12
Dec2010 $3.35
Dec2009 $1.54
Dec2008 $2.32
Dec2007 $3.36
Dec2006 $2.99
Dec2005 $2.97
Dec2004 $2.68
Dec2003 $2.30
Dec2002 $2.01
Dec2001 $0.98
Dec2000 $2.07
Dec1999 $1.81

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.13
Dec2018 $5.60
Dec2017 $4.57
Dec2016 $5.24
Dec2015 $4.94
Dec2014 $4.71
Dec2013 $4.04
Dec2012 $3.43
Dec2011 $3.11
Dec2010 $2.64
Dec2009 $2.40
Dec2008 $2.84
Dec2007 $3.02
Dec2006 $2.77
Dec2005 $2.50
Dec2004 $2.18
Dec2003 $1.90

Recommended Reading:

Other ModernGraham posts about the company

American Express Co Valuation – November 2018 $AXP
American Express Co. Valuation – February 2018 $AXP
5 Undervalued Dow Components to Research – March 2017
5 Undervalued Dow Components to Research – February 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – January 2017

Other ModernGraham posts about related companies

Broadridge Financial Solutions Inc Valuation – April 2019 #BR
T.Rowe Price Group Inc Valuation – March 2019 #TROW
Moody’s Corp Valuation – March 2019 #MCO
Charles Schwab Corp Valuation – March 2019 #SCHW
Willis Towers Watson PLC Valuation – March 2019 #WLTW
Paypal Holdings Inc Valuation – March 2019 #PYPL
Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
Franklin Resources Inc Valuation – March 2019 #BEN
S&P Global Inc Valuation – March 2019 #SPGI

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.

American International Group Inc Valuation – March 2019 #AIG

Company Profile (excerpt from Reuters): American International Group, Inc. (AIG), incorporated on June 9, 1967, is a global insurance company. The Company provides a range of property casualty insurance, life insurance, retirement products and other financial services to commercial and individual customers. Its segments include Commercial Insurance, Consumer Insurance, Other Operations and Legacy Portfolio. The Company’s offerings include products and services that help businesses and individuals protect their assets, manage risks and provide for retirement security. Its Core businesses include Commercial Insurance and Consumer Insurance, as well as Other Operations. Commercial Insurance includes two modules: Liability and Financial Lines and Property and Special Risks. Consumer Insurance consists of four modules: Individual Retirement, Group Retirement, Life Insurance and Personal Insurance. It also reviews and assesses its core business through the locations of its insurance operations across three geographic modules: the United States, Europe and Japan.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AIG – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,361,814,481 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -110.67% Fail
5. Moderate PEmg Ratio PEmg < 20 21,490.00 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.67 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Fail
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.00
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $0.03
MG Value based on 0% Growth $0.02
Market Implied Growth Rate 10740.75%
Current Price $42.98
% of Intrinsic Value N/A

American International Group Inc 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 poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding 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 $4.17 in 2015 to an estimated $0 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 10740.75% 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.

At the time of valuation, further research into American International Group Inc revealed the company was trading below its Graham Number of $75.74. The company pays a dividend of $1.28 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21490, which was above the industry average of 26.11.

American International Group Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Graham Number $75.74
PEmg 21,490.00
PB Ratio 0.67
Dividend Yield 2.98%
TTM Dividend $1.28
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
Long-Term Debt & Capital Lease Obligation $34,540,000,000
Total Assets $491,984,000,000
Intangible Assets $4,082,000,000
Total Liabilities $434,675,000,000
Shares Outstanding (Diluted Average) 890,110,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.92
Dec2018 -$0.01
Dec2017 -$6.54
Dec2016 -$0.78
Dec2015 $1.65
Dec2014 $5.20
Dec2013 $6.13
Dec2012 $2.04
Dec2011 $11.01
Dec2010 $11.60
Dec2009 -$90.48
Dec2008 -$756.85
Dec2007 $47.80
Dec2006 $107.20
Dec2005 $79.80
Dec2004 $73.80
Dec2003 $70.60
Dec2002 $43.40
Dec2001 $30.80
Dec2000 $46.60
Dec1999 $46.80

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.00
Dec2018 -$1.34
Dec2017 -$0.96
Dec2016 $2.17
Dec2015 $4.17
Dec2014 $6.02
Dec2013 $0.30
Dec2012 -$56.58
Dec2011 -$109.06
Dec2010 -$158.11
Dec2009 -$202.81
Dec2008 -$202.54
Dec2007 $75.03
Dec2006 $84.08
Dec2005 $68.24
Dec2004 $59.32
Dec2003 $50.60

Recommended Reading:

Other ModernGraham posts about the company

American International Group Inc – June 2018 $AIG
American International Group Inc Valuation – March 2017 $AIG
Best Stocks Below Their Graham Number – January 2017
21 Best Undervalued Stocks of the Week – 8/27/16
Best Stocks Below Their Graham Number – August 2016

Other ModernGraham posts about related companies

Chubb Ltd Valuation – March 2019 #CB
Loews Corporation Valuation – March 2019 #L
Anthem Inc Valuation – February 2019 $ANTM
Arthur J Gallagher & Co Valuation – February 2019 $AJG
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

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.

American Electric Power Company Inc Valuation – March 2019 #AEP

Company Profile (excerpt from Reuters): American Electric Power Company, Inc. (AEP), incorporated on December 20, 1906, is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries. The Company’s segments include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. The service areas of the Company’s public utility subsidiaries cover the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The public utility subsidiaries of AEP provide electric service, consisting of generation, transmission and distribution, on an integrated basis to retail customers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AEP – 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 $41,574,312,037 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 29.07% Fail
6. Moderate PEmg Ratio PEmg < 20 23.39 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.19 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 -4.77 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 $3.60
MG Growth Estimate 0.43%
MG Value $33.69
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $52.24
MG Value based on 0% Growth $30.62
Market Implied Growth Rate 7.45%
Current Price $84.28
% of Intrinsic Value 250.18%

American Electric Power Company 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 growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $3.5 in 2015 to an estimated $3.6 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.45% 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 American Electric Power Company Inc revealed the company was trading above its Graham Number of $59.15. The company pays a dividend of $2.53 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.39, 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 $-92.28.

American Electric Power Company Inc 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) -$92.28
Graham Number $59.15
PEmg 23.39
Current Ratio 0.48
PB Ratio 2.19
Current Dividend $2.53
Dividend Yield 3.00%
Number of Consecutive Years of Dividend Growth 9

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 $4,113,900,000
Total Current Liabilities $8,648,800,000
Long-Term Debt $21,648,200,000
Total Assets $68,802,800,000
Intangible Assets $52,500,000
Total Liabilities $49,743,400,000
Shares Outstanding (Diluted Average) 494,452,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.03
Dec2018 $3.90
Dec2017 $3.88
Dec2016 $1.24
Dec2015 $4.17
Dec2014 $3.34
Dec2013 $3.04
Dec2012 $2.60
Dec2011 $4.02
Dec2010 $2.53
Dec2009 $2.96
Dec2008 $3.42
Dec2007 $2.72
Dec2006 $2.53
Dec2005 $2.08
Dec2004 $2.75
Dec2003 $0.29
Dec2002 -$1.57
Dec2001 $3.01
Dec2000 $0.83
Dec1999 $3.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.60
Dec2018 $3.36
Dec2017 $3.11
Dec2016 $2.77
Dec2015 $3.50
Dec2014 $3.15
Dec2013 $3.05
Dec2012 $3.07
Dec2011 $3.24
Dec2010 $2.85
Dec2009 $2.92
Dec2008 $2.83
Dec2007 $2.38
Dec2006 $1.88
Dec2005 $1.48
Dec2004 $1.14
Dec2003 $0.59

Recommended Reading:

Other ModernGraham posts about the company

American Electric Power Co Valuation – June 2018 $AEP
American Electric Power Company Inc Valuation – March 2017 $AEP
American Electric Power Co Valuation – November 2015 Update $AEP
22 Companies in the Spotlight This Week – 11/29/14
American Electric Power Company Inc. Annual Valuation – 2014 $AEP

Other ModernGraham posts about related companies

American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
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

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.

American Water Works Co Inc Valuation – March 2019 #AWK

Company Profile (excerpt from Reuters): American Water Works Company, Inc., incorporated on August 28, 1936, is a holding company for regulated and market-based subsidiaries throughout the United States and Ontario, Canada. The Company’s Regulated Businesses segment provided water and wastewater services as public utilities in 16 states in the United States as of December 31, 2016. The Market-Based Businesses consists of four segments, including Military Services Group, which conducts operation and maintenance (O&M) of water and wastewater systems for military bases; Contract Operations Group, which conducts O&M of water and wastewater facilities for municipalities and the food and beverage industry; Homeowner Services Group, which primarily provides water and sewer line protection plans for homeowners, and Keystone, which provides water services for natural gas exploration and production companies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AWK – 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 $19,002,457,263 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.37 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 71.64% Pass
6. Moderate PEmg Ratio PEmg < 20 34.76 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.28 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 0.37 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.76 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 $3.02
MG Growth Estimate 4.70%
MG Value $54.13
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $43.86
MG Value based on 0% Growth $25.71
Market Implied Growth Rate 13.13%
Current Price $105.13
% of Intrinsic Value 194.23%

American Water Works Company 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, 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 $2.3 in 2015 to an estimated $3.02 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.13% 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 American Water Works Company Inc revealed the company was trading above its Graham Number of $50.93. The company pays a dividend of $1.78 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 34.76, which was above the industry average of 23.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-79.66.

American Water Works Company Inc 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) -$79.66
Graham Number $50.93
PEmg 34.76
Current Ratio 0.37
PB Ratio 3.28
Current Dividend $1.78
Dividend Yield 1.69%
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 $781,000,000
Total Current Liabilities $2,094,000,000
Long-Term Debt $7,569,000,000
Total Assets $21,223,000,000
Intangible Assets $1,659,000,000
Total Liabilities $15,359,000,000
Shares Outstanding (Diluted Average) 183,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.55
Dec2018 $3.15
Dec2017 $2.38
Dec2016 $2.62
Dec2015 $2.64
Dec2014 $2.35
Dec2013 $2.06
Dec2012 $2.01
Dec2011 $1.75
Dec2010 $1.53
Dec2009 -$1.39
Dec2008 -$3.52
Dec2007 -$2.14
Dec2006 -$1.01
Dec2005 -$2.03
Dec2001 $1.61
Dec2000 $1.61
Dec1999 $1.40
Dec1998 $1.54
Dec1997 $1.42
Dec1996 $1.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.02
Dec2018 $2.72
Dec2017 $2.47
Dec2016 $2.46
Dec2015 $2.30
Dec2014 $2.07
Dec2013 $1.68
Dec2012 $1.02
Dec2011 $0.10
Dec2010 -$0.92
Dec2009 -$2.10
Dec2008 -$2.11
Dec2007 -$1.07
Dec2006 -$0.25
Dec2005 $0.36
Dec2001 $1.55
Dec2000 $1.49

Recommended Reading:

Other ModernGraham posts about the company

American Water Works Co Inc Valuation – June 2018 $AWK
American Water Works Company Inc Valuation – Initial Coverage $AWK

Other ModernGraham posts about related companies

Alliant Energy Corp Valuation – March 2019 #LNT
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

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.

Mid-America Apartment Communities Inc Valuation – March 2019 #MAA

Company Profile (excerpt from Reuters): Mid-America Apartment Communities, Inc. (MAA), incorporated on September 22, 1993, is a multifamily focused, self-administered and self-managed real estate investment trust (REIT). The Company owns, operates, acquires and develops apartment communities primarily located in the Southeast and Southwest regions of the United States. It operates through three segments: Large market same store, Secondary market same store and Non-Same Store and Other. Its Large market same store communities are communities in markets with a population of at least one million and at least 1% of the total public multifamily REIT units that it has owned and that have been stabilized for at least a full 12 months. Its Secondary market same store communities are communities in markets with populations of more than one million but less than 1% of the total public multifamily REIT units or markets with populations of less than one million that it has owned and that have been stabilized for at least a full 12 months. Its Non-same store communities and other includes recent acquisitions and communities in development or lease-up communities.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MAA – 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 $12,056,183,749 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.08 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 52.37% Pass
6. Moderate PEmg Ratio PEmg < 20 44.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.89 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 0.08 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.93 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

EPSmg $2.39
MG Growth Estimate -2.51%
MG Value $8.32
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $34.69
MG Value based on 0% Growth $20.34
Market Implied Growth Rate 17.88%
Current Price $105.90
% of Intrinsic Value 1273.44%

Mid-America Apartment Communities 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, high PEmg 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 explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.87 in 2015 to an estimated $2.39 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.88% 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 Mid-America Apartment Communities Inc revealed the company was trading above its Graham Number of $48.81. The company pays a dividend of $3.69 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 44.27, which was below the industry average of 61.92, 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 $-43.18.

Mid-America Apartment Communities Inc 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) -$43.18
Graham Number $48.81
PEmg 44.27
Current Ratio 0.08
PB Ratio 1.89
Current Dividend $3.69
Dividend Yield 3.48%
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
Total Current Assets $34,259,000
Total Current Liabilities $413,850,000
Long-Term Debt $4,528,328,000
Total Assets $11,323,781,000
Intangible Assets $3,900,000
Total Liabilities $4,951,592,000
Shares Outstanding (Diluted Average) 113,881,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.96
Dec2018 $1.93
Dec2017 $2.86
Dec2016 $2.69
Dec2015 $4.41
Dec2014 $1.97
Dec2013 $2.25
Dec2012 $2.56
Dec2011 $1.31
Dec2010 $0.56
Dec2009 $0.85
Dec2008 $0.64
Dec2007 $1.01
Dec2006 $0.29
Dec2005 $0.25
Dec2004 $0.50
Dec2003 -$0.07
Dec2002 -$0.11
Dec2001 $0.72
Dec2000 $0.78
Dec1999 $0.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.39
Dec2018 $2.66
Dec2017 $2.97
Dec2016 $2.94
Dec2015 $2.87
Dec2014 $1.98
Dec2013 $1.83
Dec2012 $1.47
Dec2011 $0.91
Dec2010 $0.70
Dec2009 $0.71
Dec2008 $0.61
Dec2007 $0.53
Dec2006 $0.25
Dec2005 $0.24
Dec2004 $0.27
Dec2003 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Mid-America Apartment Communities Inc Valuation – June 2018 $MAA
Mid-America Apartment Communities Inc Valuation – Initial Coverage $MAA

Other ModernGraham posts about related companies

Extra Space Storage Inc Valuation – March 2019 #EXR
Digital Realty Trust Inc Valuation – March 2019 #DLR
Equity Residential Valuation – March 2019 #EQR
Prologis Inc Valuation – March 2019 #PLD
Duke Realty Corp Valuation – March 2019 $DRE
Realty Income Corp Valuation – February 2019 $O
Ventas Inc Valuation – February 2019 $VTR
SL Green Realty Corp Valuation – February 2019 $SLG
Regency Centers Corp Valuation – February 2019 $REG
Host Hotels & Resorts Inc Valuation – February 2019 $HST

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.

American Tower Corp Valuation – March 2019 #AMT

Company Profile (excerpt from Reuters): American Tower Corporation (ATC), incorporated on September 24, 1996, is a holding company. The Company operates as a real estate investment trust (REIT), which owns, operates and develops multitenant communications real estate. Its segments include U.S. property; Asia property; Europe, Middle East and Africa (EMEA) property; Latin America property, and Services. Its primary business is property operations, which include the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities, and tenants in various other industries. Its U.S. property segment includes operations in the United States. Its Asia property segment includes operations in India. The EMEA property segment includes operations in Germany, Ghana, Nigeria, South Africa and Uganda. The Latin America property segment includes operations in Brazil, Chile, Colombia, Costa Rica, Mexico and Peru. Its services segment includes tower-related services in the United States, including site acquisition, zoning and permitting and structural analysis, which primarily supports its site leasing business, including the addition of tenants and equipment on its sites.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMT – 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 $83,140,713,988 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.51 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 149.29% Pass
6. Moderate PEmg Ratio PEmg < 20 68.93 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 14.20 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 0.51 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.99 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 $2.73
MG Growth Estimate 11.31%
MG Value $85.09
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $39.64
MG Value based on 0% Growth $23.24
Market Implied Growth Rate 30.22%
Current Price $188.48
% of Intrinsic Value 221.51%

American Tower Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, 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 $1.56 in 2015 to an estimated $2.73 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 30.22% 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 American Tower Corp revealed the company was trading above its Graham Number of $30.04. 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 68.94, which was below the industry average of 93.05, 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 $-55.63.

American Tower Corp 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) -$55.63
Graham Number $30.04
PEmg 68.94
Current Ratio 0.51
PB Ratio 14.20
Current Dividend $3.15
Dividend Yield 1.67%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,385,100,000
Total Current Liabilities $4,689,900,000
Long-Term Debt $18,405,100,000
Total Assets $33,010,400,000
Intangible Assets $16,676,200,000
Total Liabilities $27,110,800,000
Shares Outstanding (Diluted Average) 444,436,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.31
Dec2018 $2.77
Dec2017 $2.67
Dec2016 $1.98
Dec2015 $1.41
Dec2014 $2.00
Dec2013 $1.38
Dec2012 $1.60
Dec2011 $0.99
Dec2010 $0.92
Dec2009 $0.61
Dec2008 $0.84
Dec2007 $0.13
Dec2006 $0.06
Dec2005 -$0.60
Dec2004 -$1.10
Dec2003 -$1.56
Dec2002 -$5.95
Dec2001 -$2.35
Dec2000 -$1.15
Dec1999 -$0.34

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.73
Dec2018 $2.35
Dec2017 $2.06
Dec2016 $1.73
Dec2015 $1.56
Dec2014 $1.55
Dec2013 $1.25
Dec2012 $1.12
Dec2011 $0.82
Dec2010 $0.66
Dec2009 $0.42
Dec2008 $0.17
Dec2007 -$0.31
Dec2006 -$0.97
Dec2005 -$1.76
Dec2004 -$2.36
Dec2003 -$2.75

Recommended Reading:

Other ModernGraham posts about the company

American Tower Corp Valuation – June 2018 $AMT
American Tower Corp Valuation – February 2017 $AMT
American Tower Corp Valuation – November 2015 Update $AMT
26 Companies in the Spotlight This Week – 11/22/14
American Tower Corporation Annual Valuation – 2014 $AMT

Other ModernGraham posts about related companies

Charter Communications Inc Valuation – February 2019 $CHTR
DISH Network Corp Valuation – February 2019 $DISH
AT&T Inc Valuation – January 2019 $T
Juniper Networks Inc Valuation – January 2019 $JNPR
SBA Communications Corp Valuation – January 2019 $SBAC
Harris Corp Valuation – December 2018 $HRS
Verizon Communications Inc Valuation – November 2018 $VZ
Lumentum Holdings Inc Valuation – October 2018 $LITE
Windstream Holdings Inc Valuation – September 2018 $WIN
Sierra Wireless Inc Valuation – September 2018 $TSE:SW

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.

American Airlines Group Inc Valuation – March 2019 #AAL

Company Profile (excerpt from Reuters): American Airlines Group Inc., incorporated on February 16, 1982, is a holding company. The Company’s primary business activity is the operation of a network air carrier, providing scheduled air transportation for passengers and cargo. The Company operates through American segment, which provides air transportation for passengers and cargo. Together with its regional airline subsidiaries and third-party regional carriers operating as American Eagle, its airline operated an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries, principally from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, District of Columbia, as of December 31, 2016. In the fiscal year ended December 31, 2016, approximately 199 million passengers boarded its mainline and regional flights.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AAL – 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 $14,392,244,457 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 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 -141.07% Fail
6. Moderate PEmg Ratio PEmg < 20 7.09 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.26 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 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.67 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 $4.52
MG Growth Estimate 15.00%
MG Value $174.07
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $65.56
MG Value based on 0% Growth $38.43
Market Implied Growth Rate -0.71%
Current Price $32.04
% of Intrinsic Value 18.41%

American Airlines Group 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 or growth over the last ten years, and the poor dividend history. 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 $1.37 in 2015 to an estimated $4.52 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.71% annual earnings loss 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 American Airlines Group Inc revealed the company was trading below its Graham Number of $55.21. The company pays a dividend of $0.4 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 7.09, which was below the industry average of 10.49, 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 $-86.27.

American Airlines Group 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) -$86.27
Graham Number $55.21
PEmg 7.09
Current Ratio 1.12
PB Ratio 1.26
Current Dividend $0.40
Dividend Yield 1.25%
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 $19,257,000,000
Total Current Liabilities $17,121,000,000
Long-Term Debt $20,650,000,000
Total Assets $70,878,000,000
Intangible Assets $15,322,000,000
Total Liabilities $59,108,000,000
Shares Outstanding (Diluted Average) 461,916,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.50
Dec2018 $3.03
Dec2017 $2.61
Dec2016 $4.65
Dec2015 $11.07
Dec2014 $3.93
Dec2013 -$6.54
Dec2012 -$7.52
Dec2011 -$15.83
Dec2010 -$3.78
Dec2009 -$13.36
Dec2008 -$21.85
Dec2007 $4.77
Dec2006 $2.62
Dec2005 -$13.87
Dec2004 -$12.69
Dec2003 -$20.78
Dec2002 -$60.46
Dec2001 -$30.60
Dec2000 $13.47
Dec1999 $16.76

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.52
Dec2018 $4.37
Dec2017 $4.41
Dec2016 $3.91
Dec2015 $1.37
Dec2014 -$4.30
Dec2013 -$8.75
Dec2012 -$10.72
Dec2011 -$11.55
Dec2010 -$8.38
Dec2009 -$9.90
Dec2008 -$8.18
Dec2007 -$3.56
Dec2006 -$12.16
Dec2005 -$22.26
Dec2004 -$25.04
Dec2003 -$26.25

Recommended Reading:

Other ModernGraham posts about the company

American Airlines Group Inc Valuation – May 2018 $AAL
American Airlines Group Inc Valuation – February 2017 $AAL
American Airlines Group Inc Valuation – August 2016 $AAL
American Airlines Group Analysis – 2015 Initial Coverage $AAL

Other ModernGraham posts about related companies

Alaska Air Group Inc Valuation – February 2019 $ALK
Delta Air Lines Inc Valuation – January 2019 $DAL
United Continental Holdings Inc Valuation – January 2019 $UAL
JetBlue Airways Corp Valuation – August 2018 $JBLU
SkyWest Inc Valuation – July 2018 $SKYW
American Airlines Group Inc Valuation – May 2018 $AAL
Southwest Airlines Co Valuation – May 2018 $LUV
Alaska Air Group Inc Valuation – May 2018 $ALK
Delta Air Lines Inc Valuation – March 2018 $DAL
United Continental Holdings Inc Valuation – Initial Coverage $UAL

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.

Ameren Corp Valuation – March 2019 #AEE

Company Profile (excerpt from Reuters): Ameren Corporation (Ameren), incorporated on August 7, 1995, is a utility holding company. The Company’s primary assets are its equity interests in its subsidiaries, including Ameren Missouri, Ameren Illinois and Ameren Transmission Company (ATXI). The Company operates through four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas and Ameren Transmission. The Ameren Missouri segment includes all of the operations of Ameren Missouri. The Ameren Illinois Electric Distribution segment consists of the electric distribution business of Ameren Illinois. The Ameren Illinois Natural Gas segment consists of the natural gas business of Ameren Illinois. The ATXI segment is primarily composed of the aggregated electric transmission businesses of Ameren Illinois and ATXI.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AEE – 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 $17,540,601,213 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.57 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -780.47% Fail
6. Moderate PEmg Ratio PEmg < 20 24.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.28 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 0.57 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.81 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 $2.93
MG Growth Estimate 15.00%
MG Value $112.68
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $42.44
MG Value based on 0% Growth $24.88
Market Implied Growth Rate 8.00%
Current Price $71.70
% of Intrinsic Value 63.63%

Ameren Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $1.35 in 2015 to an estimated $2.93 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8% 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 Ameren Corp revealed the company was trading above its Graham Number of $47.77. The company pays a dividend of $1.85 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 24.5, which was above the industry average of 23.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-72.59.

Ameren 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) -$72.59
Graham Number $47.77
PEmg 24.50
Current Ratio 0.57
PB Ratio 2.28
Current Dividend $1.85
Dividend Yield 2.58%
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 $1,533,000,000
Total Current Liabilities $2,687,000,000
Long-Term Debt $7,859,000,000
Total Assets $27,215,000,000
Intangible Assets $411,000,000
Total Liabilities $19,442,000,000
Shares Outstanding (Diluted Average) 246,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.25
Dec2018 $3.32
Dec2017 $2.14
Dec2016 $2.68
Dec2015 $2.59
Dec2014 $2.40
Dec2013 $1.18
Dec2012 -$4.01
Dec2011 $2.15
Dec2010 $0.58
Dec2009 $2.78
Dec2008 $2.88
Dec2007 $2.98
Dec2006 $2.66
Dec2005 $3.02
Dec2004 $2.84
Dec2003 $3.25
Dec2002 $2.61
Dec2001 $3.40
Dec2000 $3.33
Dec1999 $2.81

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.93
Dec2018 $2.72
Dec2017 $2.34
Dec2016 $1.95
Dec2015 $1.35
Dec2014 $0.64
Dec2013 $0.02
Dec2012 -$0.08
Dec2011 $2.01
Dec2010 $2.09
Dec2009 $2.85
Dec2008 $2.88
Dec2007 $2.90
Dec2006 $2.87
Dec2005 $2.99
Dec2004 $3.01
Dec2003 $3.09

Recommended Reading:

Other ModernGraham posts about the company

Ameren Corp Valuation – May 2018 $AEE
Ameren Corp Valuation – February 2017 $AEE
Ameren Corp Valuation – August 2016 $AEE
Ameren Corporation Analysis – 2015 Update $AEE
21 Companies in the Spotlight This Week – June 14, 2014

Other ModernGraham posts about related companies

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
FirstEnergy Corp Valuation – January 2019 $FE
Edison International Valuation – January 2019 $EIX
WEC Energy Group Inc Valuation – January 2019 $WEC
Southern Co Valuation – January 2019 $SO

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.

Ametek Inc Valuation – March 2019 #AME

Company Profile (excerpt from Reuters): AMETEK, Inc., incorporated on May 8, 1986, is a manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. The Company operates through two segments: Electronic Instruments (EIG) and Electromechanical (EMG). EIG designs and manufactures instruments for the process, power and industrial and aerospace markets. EMG is a differentiated supplier of precision motion control solutions, thermal management systems, specialty metals and electrical interconnects. Its end markets include aerospace and defense, medical, automation, mass transit, petrochemical and other industrial markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AME – 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 $18,072,893,170 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 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 121.55% Pass
6. Moderate PEmg Ratio PEmg < 20 24.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.34 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 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.94 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 $3.27
MG Growth Estimate 7.03%
MG Value $73.71
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $47.38
MG Value based on 0% Growth $27.77
Market Implied Growth Rate 7.93%
Current Price $79.57
% of Intrinsic Value 107.95%

AMETEK, 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, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.22 in 2015 to an estimated $3.27 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 7.93% 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 within a margin of safety relative to the price.

At the time of valuation, further research into AMETEK, Inc. revealed the company was trading above its Graham Number of $40.56. The company pays a dividend of $0.56 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 24.35, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.17.

AMETEK, Inc. 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) -$11.17
Graham Number $40.56
PEmg 24.35
Current Ratio 1.46
PB Ratio 4.34
Current Dividend $0.56
Dividend Yield 0.70%
Number of Consecutive Years of Dividend Growth 1

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 $1,836,144,000
Total Current Liabilities $1,258,704,000
Long-Term Debt $2,273,837,000
Total Assets $8,662,288,000
Intangible Assets $6,015,804,000
Total Liabilities $4,420,366,000
Shares Outstanding (Diluted Average) 231,335,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.00
Dec2018 $3.34
Dec2017 $2.94
Dec2016 $2.19
Dec2015 $2.45
Dec2014 $2.37
Dec2013 $2.10
Dec2012 $1.88
Dec2011 $1.58
Dec2010 $1.18
Dec2009 $0.85
Dec2008 $1.02
Dec2007 $0.94
Dec2006 $0.76
Dec2005 $0.57
Dec2004 $0.47
Dec2003 $0.37
Dec2002 $0.37
Dec2001 $0.29
Dec2000 $0.31
Dec1999 $0.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.27
Dec2018 $2.82
Dec2017 $2.51
Dec2016 $2.26
Dec2015 $2.22
Dec2014 $2.02
Dec2013 $1.73
Dec2012 $1.47
Dec2011 $1.21
Dec2010 $1.00
Dec2009 $0.88
Dec2008 $0.85
Dec2007 $0.72
Dec2006 $0.57
Dec2005 $0.46
Dec2004 $0.39
Dec2003 $0.34

Recommended Reading:

Other ModernGraham posts about the company

Ametek Inc Valuation – April 2018 $AME
AMETEK Inc Valuation – December 2016 $AME
Ametek Inc Valuation – August 2016 $AME
5 Undervalued Stocks Near Lows for Enterprising Value Investors – Aug 2016
5 Companies for Enterprising Investors Near 52 Week Lows – June 2016

Other ModernGraham posts about related companies

Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP
Applied Materials Inc Valuation – February 2019 $AMAT
Microchip Technology Inc Valuation – February 2019 $MCHP
Broadcom Inc Valuation – February 2019 $AVGO
KLA-Tencor Corp Valuation – January 2019 $KLAC
TE Connectivity Ltd Valuation – January 2019 $TEL
NVIDIA Corp Valuation – January 2019 $NVDA

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.

Raymond James Financial Valuation – February 2019 $RJF

Company Profile (excerpt from Reuters): Raymond James Financial, Inc. (RJF), incorporated on January 24, 1974, is a financial holding company. The Company’s subsidiaries include Raymond James & Associates, Inc. (RJ&A), Raymond James Financial Services, Inc. (RJFS), Raymond James Financial Services Advisors, Inc. (RJFSA), Raymond James Ltd. (RJ Ltd.), Eagle Asset Management, Inc. (Eagle), and Raymond James Bank, N.A. (RJ Bank). The Company operates through five segments: Private Client Group (PCG), Capital Markets, Asset Management, RJ Bank and the Other segment. The Private Client Group segment includes the retail branches of the Company’s broker-dealer subsidiaries located throughout the United States, Canada and the United Kingdom. The Capital Markets segment includes institutional sales and trading in the United States, Canada and Europe. The Asset Management segment includes the operations of Eagle, the Eagle Family of Funds, Cougar Global Investments Limited (Cougar), the asset management operations of RJ&A, trust services of RJ Trust, and other fee-based asset management programs. RJ Bank segment provides corporate loans, securities based loans (SB) and residential loans. The Other segment includes principal capital and private equity activities, as well as certain corporate costs of RJF.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RJF – 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 $11,570,757,649 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 171.22% Pass
5. Moderate PEmg Ratio PEmg < 20 15.25 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.94 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 $5.38
MG Growth Estimate 12.03%
MG Value $175.15
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $77.98
MG Value based on 0% Growth $45.71
Market Implied Growth Rate 3.37%
Current Price $81.99
% of Intrinsic Value 46.81%

Raymond James Financial, Inc. 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 $2.98 in 2015 to an estimated $5.38 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.37% 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 Raymond James Financial, Inc. revealed the company was trading above its Graham Number of $81.73. The company pays a dividend of $1.1 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 15.25, which was below the industry average of 20.29, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Raymond James Financial, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $81.73
PEmg 15.25
PB Ratio 1.94
Dividend Yield 1.34%
TTM Dividend $1.10
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 12/1/2018
Long-Term Debt & Capital Lease Obligation $2,448,000,000
Total Assets $38,544,000,000
Intangible Assets $633,000,000
Total Liabilities $32,319,000,000
Shares Outstanding (Diluted Average) 147,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.79
Sep2018 $5.75
Sep2017 $4.33
Sep2016 $3.65
Sep2015 $3.43
Sep2014 $3.32
Sep2013 $2.58
Sep2012 $2.20
Sep2011 $2.19
Sep2010 $1.83
Sep2009 $1.25
Sep2008 $1.97
Sep2007 $2.11
Sep2006 $1.85
Sep2005 $1.33
Sep2004 $1.15
Sep2003 $0.78
Sep2002 $0.71
Sep2001 $0.88
Sep2000 $1.19
Sep1999 $0.78

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.38
Sep2018 $4.48
Sep2017 $3.72
Sep2016 $3.29
Sep2015 $2.98
Sep2014 $2.65
Sep2013 $2.21
Sep2012 $1.98
Sep2011 $1.87
Sep2010 $1.74
Sep2009 $1.70
Sep2008 $1.84
Sep2007 $1.67
Sep2006 $1.35
Sep2005 $1.06
Sep2004 $0.93
Sep2003 $0.84

Recommended Reading:

Other ModernGraham posts about the company

Raymond James Financial Inc Valuation – March 2018 $RJF

Other ModernGraham posts about related companies

Nasdaq Inc Valuation – February 2019 $NDAQ
E*Trade Financial Corp Valuation – January 2019 $ETFC
Marsh & McLennan Companies Inc Valuation – January 2019 $MMC
Intercontinental Exchange Inc Valuation – January 2019 $ICE
H&R Block Inc Valuation – January 2019 $HRB
State Street Corp Valuation – January 2019 $STT
Morgan Stanley Valuation – January 2019 $MS
MSCI Inc Valuation – January 2019 $MSCI
BlackRock Inc Valuation – January 2019 $BLK
Ameriprise Financial Inc Valuation – January 2019 $AMP

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