Amphenol Corp Valuation – March 2019 #APH

Company Profile (excerpt from Reuters): Amphenol Corporation (Amphenol), incorporated on December 19, 1986, is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments, which include Interconnect Products and Assemblies, and Cable Products and Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – 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 $28,058,928,491 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 112.11% Pass
6. Moderate PEmg Ratio PEmg < 20 29.03 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.18 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 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.32 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 $3.25
MG Growth Estimate 8.07%
MG Value $80.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $47.09
MG Value based on 0% Growth $27.60
Market Implied Growth Rate 10.26%
Current Price $94.26
% of Intrinsic Value 117.83%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.11 in 2015 to an estimated $3.25 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.26% 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 Amphenol Corporation revealed the company was trading above its Graham Number of $34.36. The company pays a dividend of $0.88 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 29.03, 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 $-4.55.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.55
Graham Number $34.36
PEmg 29.03
Current Ratio 1.86
PB Ratio 7.18
Current Dividend $0.88
Dividend Yield 0.93%
Number of Consecutive Years of Dividend Growth 7

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $4,571,600,000
Total Current Liabilities $2,451,300,000
Long-Term Debt $2,806,400,000
Total Assets $10,044,900,000
Intangible Assets $4,501,100,000
Total Liabilities $5,980,700,000
Shares Outstanding (Diluted Average) 309,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.90
Dec2018 $3.85
Dec2017 $2.06
Dec2016 $2.61
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.25
Dec2018 $2.82
Dec2017 $2.29
Dec2016 $2.33
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Amphenol Corp Valuation – May 2018 $APH
5 Best Stocks for Value Investors This Week – 2/25/17
Amphenol Corp Valuation – February 2017 $APH
21 Best Undervalued Stocks of the Week – 8/27/16
Amphenol Corporation Valuation – August 2016 $APH

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NetApp Inc Valuation – February 2019 $NTAP
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Disclaimer:

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

Campbell Soup Co Valuation – January 2019 $CPB

Company Profile (excerpt from Reuters): Campbell Soup Company, incorporated on November 23, 1922, is a food company. The Company is a manufacturer and marketer of food products. The Company’s segments include Americas Simple Meals and Beverages; Global Biscuits and Snacks, and Campbell Fresh. The Company makes a range of products from soups and simple meals to snacks and healthy beverages. The Company’s brands include Campbell’s, Garden Fresh Gourmet, Goldfish, Milano, Pace, Pepperidge Farm, Plum Organics, Prego, SpaghettiOs, Swanson and V8 Beverages.

CPB Chart

CPB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CPB – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,367,438,346 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.69 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 -15.31% Fail
6. Moderate PEmg Ratio PEmg < 20 17.33 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.35 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 0.69 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.01 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.99
MG Growth Estimate -1.52%
MG Value $10.85
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $28.82
MG Value based on 0% Growth $16.89
Market Implied Growth Rate 4.41%
Current Price $34.44
% of Intrinsic Value 317.33%

Campbell Soup Company 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 PB 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 $2.21 in 2015 to an estimated $1.99 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.41% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Campbell Soup Company revealed the company was trading above its Graham Number of $15.61. The company pays a dividend of $1.4 per share, for a yield of 4.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.33, which was below the industry average of 25.75, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-35.27.

Campbell Soup 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) -$35.27
Graham Number $15.61
PEmg 17.33
Current Ratio 0.69
PB Ratio 7.35
Current Dividend $1.40
Dividend Yield 4.07%
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 10/1/2018
Total Current Assets $2,521,000,000
Total Current Liabilities $3,662,000,000
Long-Term Debt $8,001,000,000
Total Assets $14,587,000,000
Intangible Assets $8,680,000,000
Total Liabilities $13,172,000,000
Shares Outstanding (Diluted Average) 302,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.39
Jul2018 $0.86
Jul2017 $2.89
Jul2016 $1.81
Jul2015 $2.13
Jul2014 $2.74
Jul2013 $1.44
Jul2012 $2.41
Jul2011 $2.42
Jul2010 $2.42
Jul2009 $2.05
Jul2008 $3.03
Jul2007 $2.16
Jul2006 $1.85
Jul2005 $1.71
Jul2004 $1.57
Jul2003 $1.45
Jul2002 $1.28
Jul2001 $1.55
Jul2000 $1.65
Jul1999 $1.63

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.99
Jul2018 $1.89
Jul2017 $2.33
Jul2016 $2.07
Jul2015 $2.21
Jul2014 $2.26
Jul2013 $2.07
Jul2012 $2.41
Jul2011 $2.41
Jul2010 $2.37
Jul2009 $2.28
Jul2008 $2.29
Jul2007 $1.86
Jul2006 $1.67
Jul2005 $1.55
Jul2004 $1.48
Jul2003 $1.46

Recommended Reading:

Other ModernGraham posts about the company

Campbell Soup Co Valuation – March 2018 $CPB
Campbell Soup Company Valuation – September 2017 $CPB
Campbell Soup Company Valuation – July 2016 $CPB
5 Speculative and Overvalued Companies to Avoid – February 2015
58 Companies in the Spotlight This Week – 1/31/15

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Coca-Cola European Partners PLC Valuation – July 2018 $CCE
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Disclaimer:

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

Ameriprise Financial Inc Valuation – January 2019 $AMP

Company Profile (excerpt from Reuters): Comcast Corporation, incorporated on December 7, 2001, is a media and technology company. The Company has two primary businesses: Comcast Cable and NBCUniversal. The Company’s Comcast Cable business operates in the Cable Communications segment. Its NBCUniversal business operates in four business segments: Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks (collectively, the NBCUniversal segments). Its other business interests consist primarily of Comcast Spectacor, which owns the Philadelphia Flyers and the Wells Fargo Center arena in Philadelphia, Pennsylvania and operates arena management-related businesses.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMP – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $15,808,544,980 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 166.04% Pass
5. Moderate PEmg Ratio PEmg < 20 10.96 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.96 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.35
MG Growth Estimate 9.69%
MG Value $288.60
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $150.12
MG Value based on 0% Growth $88.00
Market Implied Growth Rate 1.23%
Current Price $113.44
% of Intrinsic Value 39.31%

Ameriprise 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 $6.29 in 2014 to an estimated $10.35 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.23% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Ameriprise Financial, Inc. revealed the company was trading above its Graham Number of $112.58. The company pays a dividend of $3.24 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.96, which was below the industry average of 18, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Ameriprise Financial, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Graham Number $112.58
PEmg 10.96
PB Ratio 2.96
Dividend Yield 2.86%
TTM Dividend $3.24
Number of Consecutive Years of Dividend Growth 13

Useful Links:

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Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Long-Term Debt & Capital Lease Obligation $4,240,000,000
Total Assets $145,191,000,000
Intangible Assets $0
Total Liabilities $139,573,000,000
Shares Outstanding (Diluted Average) 146,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.77
Dec2017 $9.44
Dec2016 $7.81
Dec2015 $8.48
Dec2014 $8.30
Dec2013 $6.44
Dec2012 $4.62
Dec2011 $4.53
Dec2010 $4.18
Dec2009 $2.95
Dec2008 -$0.16
Dec2007 $3.39
Dec2006 $2.54
Dec2005 $2.32
Dec2004 $3.22
Dec2003 $2.95

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.35
Dec2017 $8.46
Dec2016 $7.69
Dec2015 $7.25
Dec2014 $6.29
Dec2013 $5.04
Dec2012 $3.97
Dec2011 $3.42
Dec2010 $2.77
Dec2009 $2.11
Dec2008 $1.88
Dec2007 $2.90
Dec2006 $2.50
Dec2005 $2.22
Dec2004 $1.86
Dec2003 $0.98

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Stocks for Value Investors with a High Beta – July 2018
10 Best Dividend Paying Stocks for the Enterprising Investor – May 2018
10 Undervalued Stocks for the Enterprising Investor – April 2018
Ameriprise Financial Inc Valuation – March 2018 $AMP
10 Companies Benjamin Graham Would Invest In Today – June 2016

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Disclaimer:

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

Stamps.com Inc Valuation – June 2018 $STMP

Company Profile (excerpt from Reuters): Stamps.com Inc., incorporated on January 9, 1998, is a provider of Internet-based mailing and shipping solutions in the United States. The Company offers mailing and shipping products and services to its customers under the Stamps.com, Endicia, ShipStation, ShipWorks and ShippingEasy brands. It operates through the Internet Mailing and Shipping Services segment. Under the Stamps.com and Endicia brands, customers use its United States Postal Service (USPS) only solutions to mail and ship a range of mail pieces and packages through the USPS. USPS mailing and shipping solutions enable users to print electronic postage directly onto envelopes, plain paper, or labels using only a standard personal computer, printer and Internet connection. Its solutions support a range of USPS mail classes, including First Class Mail, Priority Mail, Priority Mail Express, Media Mail, Parcel Select and others.

STMP Chart

STMP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of STMP – June 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,784,459,366 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.80 Pass
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 789.96% Pass
6. Moderate PEmg Ratio PEmg < 20 41.78 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.06 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.80 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.28 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.41
MG Growth Estimate 15.00%
MG Value $246.66
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $92.90
MG Value based on 0% Growth $54.46
Market Implied Growth Rate 16.64%
Current Price $267.70
% of Intrinsic Value 108.53%

Stamps.com 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 over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. 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 $2.19 in 2014 to an estimated $6.41 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 16.64% 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 Stamps.com Inc. revealed the company was trading above its Graham Number of $79.24. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 41.78, which was above the industry average of 37.1. Finally, the company was trading above its Net Current Asset Value (NCAV) of $7.83.

Stamps.com 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) $7.83
Graham Number $79.24
PEmg 41.78
Current Ratio 2.80
PB Ratio 9.06
Current Dividend $0.00
Dividend Yield 0.00%
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 3/1/2018
Total Current Assets $325,612,000
Total Current Liabilities $116,402,000
Long-Term Debt $58,158,000
Total Assets $727,396,000
Intangible Assets $316,686,000
Total Liabilities $180,742,000
Shares Outstanding (Diluted Average) 18,511,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.85
Dec2017 $8.19
Dec2016 $4.12
Dec2015 -$0.26
Dec2014 $2.25
Dec2013 $2.71
Dec2012 $2.30
Dec2011 $1.73
Dec2010 $0.38
Dec2009 $0.38
Dec2008 $0.53
Dec2007 $0.50
Dec2006 $0.69
Dec2005 $0.44
Dec2004 -$0.21
Dec2003 -$0.42
Dec2002 -$0.28
Dec2001 -$8.28
Dec2000 -$9.08
Dec1999 -$5.18
Dec1998 -$1.70

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.41
Dec2017 $4.26
Dec2016 $2.27
Dec2015 $1.48
Dec2014 $2.19
Dec2013 $1.94
Dec2012 $1.39
Dec2011 $0.86
Dec2010 $0.45
Dec2009 $0.49
Dec2008 $0.49
Dec2007 $0.38
Dec2006 $0.23
Dec2005 -$0.58
Dec2004 -$1.95
Dec2003 -$3.43
Dec2002 -$4.92

Recommended Reading:

Other ModernGraham posts about the company

Stamps.com Inc Valuation – Initial Coverage $STMP

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Disclaimer:

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

Amphenol Corp Valuation – May 2018 $APH

Company Profile (excerpt from Reuters): Amphenol Corporation (Amphenol), incorporated on December 19, 1986, is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments, which include Interconnect Products and Assemblies, and Cable Products and Solutions.

APH Chart

APH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – May 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 $26,272,800,512 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.80 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 111.43% Pass
6. Moderate PEmg Ratio PEmg < 20 32.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.02 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 1.80 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.42 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 $2.70
MG Growth Estimate 6.35%
MG Value $57.17
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $39.10
MG Value based on 0% Growth $22.92
Market Implied Growth Rate 12.08%
Current Price $88.10
% of Intrinsic Value 154.11%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.08% 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 Amphenol Corporation revealed the company was trading above its Graham Number of $31.92. The company pays a dividend of $0.7 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 32.67, which was below the industry average of 49.78, 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 $-4.74.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.74
Graham Number $31.92
PEmg 32.67
Current Ratio 1.80
PB Ratio 7.02
Current Dividend $0.70
Dividend Yield 0.79%
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 3/1/2018
Total Current Assets $3,937,100,000
Total Current Liabilities $2,184,700,000
Long-Term Debt $2,489,400,000
Total Assets $9,403,700,000
Intangible Assets $4,580,500,000
Total Liabilities $5,435,800,000
Shares Outstanding (Diluted Average) 316,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.47
Dec2017 $2.06
Dec2016 $2.61
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12
Dec1998 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.70
Dec2017 $2.29
Dec2016 $2.33
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26
Dec2002 $0.23

Recommended Reading:

Other ModernGraham posts about the company

5 Best Stocks for Value Investors This Week – 2/25/17
Amphenol Corp Valuation – February 2017 $APH
21 Best Undervalued Stocks of the Week – 8/27/16
Amphenol Corporation Valuation – August 2016 $APH
19 Best Stocks For Value Investors This Week – 1/9/16

Other ModernGraham posts about related companies

Qualcomm Inc Valuation – May 2018 $QCOM
Advanced Micro Devices Inc Valuation – May 2018 $AMD
Ametek Inc Valuation – April 2018 $AME
Qorvo Inc Valuation – April 2018 $QRVO
FLIR Systems Inc Valuation – April 2018 $FLIR
NetApp Inc Valuation – April 2018 $NTAP
Applied Materials Inc Valuation – April 2018 $AMAT
Broadcom Inc Valuation – April 2018 $AVGO
Microchip Technology Inc Valuation – April 2018 $MCHP
KLA-Tencor Corp Valuation – March 2018 $KLAC

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.

Campbell Soup Co Valuation – March 2018 $CPB

Company Profile (excerpt from Reuters): Campbell Soup Company, incorporated on November 23, 1922, is a food company. The Company is a manufacturer and marketer of food products. The Company’s segments include Americas Simple Meals and Beverages; Global Biscuits and Snacks, and Campbell Fresh. The Company makes a range of products from soups and simple meals to snacks and healthy beverages. The Company’s brands include Campbell’s, Garden Fresh Gourmet, Goldfish, Milano, Pace, Pepperidge Farm, Plum Organics, Prego, SpaghettiOs, Swanson and V8 Beverages.

CPB Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CPB – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,020,457,004 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.64 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 11.61% Fail
6. Moderate PEmg Ratio PEmg < 20 16.68 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.71 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.64 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.07 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 $2.60
MG Growth Estimate 2.20%
MG Value $33.51
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $37.64
MG Value based on 0% Growth $22.07
Market Implied Growth Rate 4.09%
Current Price $43.31
% of Intrinsic Value 129.23%

Campbell Soup Company 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 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 Overvalued after growing its EPSmg (normalized earnings) from $2.26 in 2014 to an estimated $2.6 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.09% 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 Campbell Soup Company revealed the company was trading above its Graham Number of $19.13. The company pays a dividend of $1.4 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.68, which was below the industry average of 33.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-14.84.

Campbell Soup 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) -$14.84
Graham Number $19.13
PEmg 16.68
Current Ratio 0.64
PB Ratio 6.71
Current Dividend $1.40
Dividend Yield 3.23%
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 1/1/2018
Total Current Assets $1,928,000,000
Total Current Liabilities $3,012,000,000
Long-Term Debt $2,247,000,000
Total Assets $8,336,000,000
Intangible Assets $3,744,000,000
Total Liabilities $6,394,000,000
Shares Outstanding (Diluted Average) 301,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.99
Jul2017 $2.89
Jul2016 $1.81
Jul2015 $2.13
Jul2014 $2.74
Jul2013 $1.44
Jul2012 $2.41
Jul2011 $2.42
Jul2010 $2.42
Jul2009 $2.05
Jul2008 $3.03
Jul2007 $2.16
Jul2006 $1.85
Jul2005 $1.71
Jul2004 $1.57
Jul2003 $1.45
Jul2002 $1.28
Jul2001 $1.55
Jul2000 $1.65
Jul1999 $1.63
Jul1998 $1.44

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.60
Jul2017 $2.33
Jul2016 $2.07
Jul2015 $2.21
Jul2014 $2.26
Jul2013 $2.07
Jul2012 $2.41
Jul2011 $2.41
Jul2010 $2.37
Jul2009 $2.28
Jul2008 $2.29
Jul2007 $1.86
Jul2006 $1.67
Jul2005 $1.55
Jul2004 $1.48
Jul2003 $1.46
Jul2002 $1.48

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – February 2015
58 Companies in the Spotlight This Week – 1/31/15
Campbell Soup Company Annual Valuation – 2015 $CPB
14 Companies in the Spotlight This Week – 1/18/14
ModernGraham Valuation: Campbell Soup Co. (CPB)

Other ModernGraham posts about related companies

The Coca-Cola Co Valuation – February 2018 $KO
Campbell Soup Company Valuation – September 2017 $CPB
Post Holdings Inc Valuation – Initial Coverage $POST
Dean Foods Co Valuation – Initial Coverage $DF
George Weston Limited Valuation – Initial Coverage $TSE:WN
Tyson Foods Inc Valuation – July 2017 $TSN
Darling Ingredients Inc Valuation – Initial Coverage $DAR
Mondelez International Inc Valuation – March 2017 $MDLZ
Calavo Growers Inc Valuation – Initial Coverage $CVGW
Hormel Foods Corp Valuation – March 2017 $HRL

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.

Ameriprise Financial Inc Valuation – March 2018 $AMP

Company Profile (obtained from Marketwatch): Ameriprise Financial, Inc. operates as a holding company. The company provides financial planning, asset management and insurance services to individuals, businesses and institutions. It operates through five segments: Advice & Wealth Management; Asset Management; Annuities; Protection; and Corporate & Other. The Advice & Wealth Management segment provides financial planning and advice, as well as full service brokerage and banking services, primarily to retail clients through the company’s financial advisors. The Asset Management segment provides investment advice and investment products to retail and institutional clients. It also provides products and services on a global scale through two complementary asset management businesses: Columbia Management and Threadneedle. The Columbia Management business primarily provides U.S. domestic products and services and Threadneedle primarily provides international investment products and services. Its international retail products are primarily provided through third-party financial institutions. The segments retail products include mutual funds and variable product funds underlying insurance and annuity separate accounts. The Annuities segment provides variable and fixed annuity products of RiverSource Life companies to retail clients. The Protection segment offers a variety of protection products to address the protection and risk management needs of the company’s retail clients, including life, DI, and property-casualty insurance. The Corporate & Other segment consists of net investment income on corporate level assets, including excess capital held in the company’s subsidiaries and other unallocated equity and other revenues from various investments as well as unallocated corporate expenses. Ameriprise Financial was founded by John Tappan in 1983 and is headquartered in Minneapolis, MN.

AMP Chart

AMP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMP – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,253,648,372 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 169.30% Pass
5. Moderate PEmg Ratio PEmg < 20 15.16 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.08 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 $10.48
MG Growth Estimate 9.99%
MG Value $298.46
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $151.96
MG Value based on 0% Growth $89.08
Market Implied Growth Rate 3.33%
Current Price $158.91
% of Intrinsic Value 53.24%

Ameriprise Financial, Inc. 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 $6.29 in 2014 to an estimated $10.48 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.33% 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 Ameriprise Financial, Inc. revealed the company was trading above its Graham Number of $114.12. The company pays a dividend of $3.24 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 15.16, which was below the industry average of 25.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research

Graham Number $114.12
PEmg 15.16
PB Ratio 4.08
Dividend Yield 2.04%
TTM Dividend $3.24
Number of Consecutive Years of Dividend Growth 13

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $5,099,000,000
Total Assets $147,470,000,000
Intangible Assets $0
Total Liabilities $141,472,000,000
Shares Outstanding (Diluted Average) 154,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $14.15
Dec2017 $9.44
Dec2016 $7.81
Dec2015 $8.48
Dec2014 $8.30
Dec2013 $6.44
Dec2012 $4.62
Dec2011 $4.53
Dec2010 $4.18
Dec2009 $2.95
Dec2008 -$0.16
Dec2007 $3.39
Dec2006 $2.54
Dec2005 $2.32
Dec2004 $3.22
Dec2003 $2.95

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.48
Dec2017 $8.46
Dec2016 $7.69
Dec2015 $7.25
Dec2014 $6.29
Dec2013 $5.04
Dec2012 $3.97
Dec2011 $3.42
Dec2010 $2.77
Dec2009 $2.11
Dec2008 $1.88
Dec2007 $2.90
Dec2006 $2.50
Dec2005 $2.22
Dec2004 $1.86
Dec2003 $0.98

Recommended Reading:

Other ModernGraham posts about the company

Ameriprise Financial Inc Valuation – June 2016 $AMP
11 Best Stocks For Value Investors This Week – 11/21/15
Ameriprise Financial Inc. Valuation – November 2015 Update $AMP
The Best Stocks of the Financial Services Industry – September 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15

Other ModernGraham posts about related companies

Navient Corp Valuation – March 2018 $NAVI
Invesco Ltd Valuation – March 2018 $IVZ
Capital One Financial Corp Valuation – March 2018 $COF
Total System Services Inc Valuation – February 2018 $TSS
Visa Inc Valuation – February 2018 $V
Goldman Sachs Group Inc Valuation – February 2018 $GS
American Express Co. Valuation – February 2018 $AXP
Encore Capital Group Inc Valuation – Initial Coverage $ECPG
T.Rowe Price Group Inc Valuation – July 2017 $TROW
T.Rowe Price Group Inc Valuation – June 2017 $TROW

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.

Campbell Soup Company Valuation – September 2017 $CPB

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

Company Profile (obtained from Google Finance): Campbell Soup Company is a food company, which manufactures and markets food products. The Company’s segments include Americas Simple Meals and Beverages; Global Biscuits and Snacks, and Campbell Fresh. The Americas Simple Meals and Beverages segment includes the retail and food service channel businesses. The segment includes the products, such as Campbell’s condensed and ready-to-serve soups; Swanson broth and stocks; Prego pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta, beans and dinner sauces; Plum food and snacks; V8 juices and beverages, and Campbell’s tomato juice. The Global Biscuits and Snacks segment includes Pepperidge Farm cookies, crackers, bakery and frozen products; Arnott’s biscuits, and Kelsen cookies. The Campbell Fresh segment includes Bolthouse Farms fresh carrots, carrot ingredients, refrigerated beverages and refrigerated salad dressings; Garden Fresh Gourmet salsa, hummus, dips and tortilla chips, and the United States refrigerated soup business.

CPB Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CPB – September 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,854,624,440 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.79 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 15.24% Fail
6. Moderate PEmg Ratio PEmg < 20 17.89 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.88 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.79 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.05 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 $2.68
MG Growth Estimate 2.76%
MG Value $37.55
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $38.85
MG Value based on 0% Growth $22.77
Market Implied Growth Rate 4.69%
Current Price $47.92
% of Intrinsic Value 127.62%

Campbell Soup Company 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 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 Overvalued after growing its EPSmg (normalized earnings) from $2.26 in 2014 to an estimated $2.68 for 2018.  This level of demonstrated earnings growth does not support the market’s implied estimate of 4.69% 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 Campbell Soup Company revealed the company was trading above its Graham Number of $19.89.  The company pays a dividend of $1.4 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 17.89, which was below the industry average of 34.94, 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 $-13.71.

Campbell Soup 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) -$13.71
Graham Number $19.89
PEmg 17.89
Current Ratio 0.79
PB Ratio 8.88
Current Dividend $1.40
Dividend Yield 2.92%
Number of Consecutive Years of Dividend Growth 1

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 7/1/2017
Total Current Assets $1,900,000,000
Total Current Liabilities $2,395,000,000
Long-Term Debt $2,499,000,000
Total Assets $7,726,000,000
Intangible Assets $3,233,000,000
Total Liabilities $6,081,000,000
Shares Outstanding (Diluted Average) 305,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.24
Jul2017 $2.89
Jul2016 $1.81
Jul2015 $2.13
Jul2014 $2.74
Jul2013 $1.44
Jul2012 $2.41
Jul2011 $2.42
Jul2010 $2.42
Jul2009 $2.05
Jul2008 $3.03
Jul2007 $2.16
Jul2006 $1.85
Jul2005 $1.71
Jul2004 $1.57
Jul2003 $1.45
Jul2002 $1.28
Jul2001 $1.55
Jul2000 $1.65
Jul1999 $1.63
Jul1998 $1.44

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.68
Jul2017 $2.33
Jul2016 $2.07
Jul2015 $2.21
Jul2014 $2.26
Jul2013 $2.07
Jul2012 $2.41
Jul2011 $2.41
Jul2010 $2.37
Jul2009 $2.28
Jul2008 $2.29
Jul2007 $1.86
Jul2006 $1.67
Jul2005 $1.55
Jul2004 $1.48
Jul2003 $1.46
Jul2002 $1.48

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – February 2015
58 Companies in the Spotlight This Week – 1/31/15
Campbell Soup Company Annual Valuation – 2015 $CPB
14 Companies in the Spotlight This Week – 1/18/14
ModernGraham Valuation: Campbell Soup Co. (CPB)

Other ModernGraham posts about related companies

George Weston Limited Valuation – Initial Coverage $TSE:WN
Tyson Foods Inc Valuation – July 2017 $TSN
Darling Ingredients Inc Valuation – Initial Coverage $DAR
Mondelez International Inc Valuation – March 2017 $MDLZ
Calavo Growers Inc Valuation – Initial Coverage $CVGW
Hormel Foods Corp Valuation – March 2017 $HRL
Lancaster Colony Corp Valuation – Initial Coverage $LANC
J M Smucker Co Valuation – February 2017 $SJM
Kraft Heinz Co Valuation – Initial Coverage $KHC
Dr Pepper Snapple Group Inc Valuation – January 2017 $DPS

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 Campus Communities Inc Valuation – September 2017 $ACC

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

Company Profile (obtained from Google Finance): American Campus Communities, Inc. is a self-managed and self-administered equity real estate investment trust (REIT). The Company’s segments include Wholly-Owned Properties, On-Campus Participating Properties, Development Services, and Property Management Services. It is engaged in the acquisition, design, financing, development, construction management, leasing and management of student housing properties. The Wholly-Owned Properties segment consists of off-campus properties, which are located in close proximity to the school campus. The On-Campus Participating Properties segment includes on-campus properties that are operated under long-term ground/facility leases with three university systems. The Development Services segment consists of development and construction management services that it provides through one of its taxable REIT subsidiaries for third-party owners. The Property Management Services segment includes revenues generated from third-party management contracts.

ACC Chart

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Learn More About Premium Membership

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ACC – September 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,574,392,992 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.98 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 -763.16% Fail
6. Moderate PEmg Ratio PEmg < 20 60.49 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.83 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 0.98 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1,808.46 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 $0.80
MG Growth Estimate 2.68%
MG Value $11.04
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $11.55
MG Value based on 0% Growth $6.77
Market Implied Growth Rate 25.99%
Current Price $48.19
% of Intrinsic Value 436.59%

American Campus 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, 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 Overvalued after growing its EPSmg (normalized earnings) from $0.68 in 2013 to an estimated $0.8 for 2017.  This level of demonstrated earnings growth does not support the market’s implied estimate of 25.99% 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 Campus Communities, Inc. revealed the company was trading above its Graham Number of $20.97.  The company pays a dividend of $1.66 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 60.49, which was above the industry average of 51.63.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.39.

American Campus 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) -$19.39
Graham Number $20.97
PEmg 60.49
Current Ratio 0.98
PB Ratio 1.83
Current Dividend $1.66
Dividend Yield 3.44%
Number of Consecutive Years of Dividend Growth 4

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Useful Links:

ModernGraham tagged articles Morningstar
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2017
Total Current Assets $61,242,000
Total Current Liabilities $62,547,000
Long-Term Debt $2,360,034,000
Total Assets $6,224,973,000
Intangible Assets $0
Total Liabilities $2,670,973,000
Shares Outstanding (Diluted Average) 134,614,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.75
Dec2016 $0.75
Dec2015 $1.02
Dec2014 $0.58
Dec2013 $0.98
Dec2012 $0.65
Dec2011 $0.80
Dec2010 $0.26
Dec2009 -$0.28
Dec2008 -$0.36
Dec2007 -$0.07
Dec2006 $1.17
Dec2005 $0.65
Dec2004 $0.15
Dec2003 -$1.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.80
Dec2016 $0.81
Dec2015 $0.83
Dec2014 $0.71
Dec2013 $0.68
Dec2012 $0.42
Dec2011 $0.23
Dec2010 $0.01
Dec2009 $0.00
Dec2008 $0.19
Dec2007 $0.37
Dec2006 $0.46
Dec2005 $0.06
Dec2004 -$0.22
Dec2003 -$0.33

Recommended Reading:

Other ModernGraham posts about the company

American Campus Communities Valuation – November 2016 $ACC
American Campus Communities Inc. Analysis – Initial Coverage $ACC

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Disclaimer:

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

Stamps.com Inc Valuation – Initial Coverage $STMP

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

Company Profile (obtained from Google Finance): Stamps.com Inc. is a provider of Internet-based mailing and shipping solutions. The Company operates through the Internet Mailing and Shipping Services segment. Under the Stamps.com and Endicia branded solutions, the Company’s customers use its service to mail and ship a range of mail pieces, including postcards, envelopes, flats and packages, using a range of United States Postal Service (USPS) mail classes, including First Class Mail, Priority Mail, Priority Mail Express, Media Mail, and Parcel Select, and among others. Its customers include individuals, small businesses, home offices, medium-size businesses and large enterprises, and within these categories, the Company targets both mailers and shippers. In addition, the Company offers multi-carrier shipping solutions under the brand names ShipStation and ShipWorks. The Company’s products and services include Mailing and Shipping Business and Customized Postage.

STMP Chart

STMP data by YCharts

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of STMP – February 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,135,037,148 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 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 317.02% Pass
6. Moderate PEmg Ratio PEmg < 20 58.05 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.64 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 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.01 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $2.19
MG Growth Estimate 8.65%
MG Value $56.57
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $31.78
MG Value based on 0% Growth $18.63
Market Implied Growth Rate 24.78%
Current Price $127.25
% of Intrinsic Value 224.93%

Stamps.com 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, the poor dividend history, 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 over the last five years, and the lack of dividends. 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 $1.39 in 2012 to an estimated $2.19 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 24.78% 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 Stamps.com Inc. revealed the company was trading above its Graham Number of $42.13. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 58.05, which was above the industry average of 50.09. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.96.

Stamps.com 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) -$3.96
Graham Number $42.13
PEmg 58.05
Current Ratio 1.86
PB Ratio 6.64
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $153,857,000
Total Current Liabilities $82,699,000
Long-Term Debt $142,993,000
Total Assets $573,137,000
Intangible Assets $340,578,000
Total Liabilities $225,692,000
Shares Outstanding (Diluted Average) 18,120,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.89
Dec2015 -$0.26
Dec2014 $2.25
Dec2013 $2.71
Dec2012 $2.30
Dec2011 $1.73
Dec2010 $0.38
Dec2009 $0.38
Dec2008 $0.53
Dec2007 $0.50
Dec2006 $0.69
Dec2005 $0.44
Dec2004 -$0.21
Dec2003 -$0.42
Dec2002 -$0.28
Dec2001 -$8.28
Dec2000 -$9.08
Dec1999 -$5.18
Dec1998 -$1.70

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.19
Dec2015 $1.48
Dec2014 $2.19
Dec2013 $1.94
Dec2012 $1.39
Dec2011 $0.86
Dec2010 $0.45
Dec2009 $0.49
Dec2008 $0.49
Dec2007 $0.38
Dec2006 $0.23
Dec2005 -$0.58
Dec2004 -$1.95
Dec2003 -$3.43
Dec2002 -$4.92
Dec2001 -$6.44
Dec2000 -$4.75

Recommended Reading:

Other ModernGraham posts about the company

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

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Disclaimer:

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

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