Ansys Inc Valuation – January 2019 $ANSS

Company Profile (excerpt from Reuters): ANSYS, Inc. (ANSYS), incorporated on January 12, 1994, develops and markets engineering simulation software and services used by engineers, designers, researchers and students across a range of industries and academia, including aerospace and defense, automotive, industrial equipment, electronics, biomedical, energy, materials and chemical processing, and semiconductors. The Company focuses on the development of open and flexible solutions that enable users to analyze designs directly on the desktop, providing a common platform for product development, from design concept to final-stage testing and validation. The Company distributes its ANSYS suite of simulation technologies through a network of independent resellers and distributors (collectively, channel partners) and direct sales offices in various locations. The Company’s product portfolio consists of Simulation Platform: ANSYS Workbench, Structures, Fluids, Electronics, Semiconductors, Multiphysics, AIM, Embedded Software, Systems, Three Dimensional (3-D) Direct Modeling and Academic.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ANSS – 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 $12,930,910,000 2. Sufficiently Strong Financial Condition 2.71 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 117.84% 6. Moderate PEmg Ratio PEmg < 20 44.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.22 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition 2.71 2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend 5. Earnings Growth EPSmg greater than 5 years ago Stage 2: Determination of Intrinsic Value

EPSmg $3.45
MG Growth Estimate 6.75%
MG Value $75.90
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $50.03
MG Value based on 0% Growth $29.33
Market Implied Growth Rate 18.17%
Current Price $154.75
% of Intrinsic Value 203.89%

ANSYS, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. 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 $2.38 in 2014 to an estimated $3.45 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.17% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into ANSYS, Inc. revealed the company was trading above its Graham Number of $52.14. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 44.85, which was below the industry average of 50.37, 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 $7.21.

ANSYS, 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) $7.21
Graham Number $52.14
PEmg 44.85
Current Ratio 2.71
PB Ratio 5.22
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 9/1/2018
Total Current Assets $1,127,567,000
Total Current Liabilities $415,439,000
Long-Term Debt $0
Total Assets $3,056,111,000
Intangible Assets $1,795,131,000
Total Liabilities $507,565,000
Shares Outstanding (Diluted Average) 86,043,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.53
Dec2017 $2.98
Dec2016 $2.99
Dec2015 $2.76
Dec2014 $2.70
Dec2013 $2.58
Dec2012 $2.14
Dec2011 $1.91
Dec2010 $1.64
Dec2009 $1.27
Dec2008 $1.29
Dec2007 $1.02
Dec2006 $0.19
Dec2005 $0.65
Dec2004 $0.53
Dec2003 $0.34
Dec2002 $0.31
Dec2001 $0.22
Dec2000 $0.25
Dec1999 $0.22
Dec1998 $0.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.45
Dec2017 $2.87
Dec2016 $2.76
Dec2015 $2.57
Dec2014 $2.38
Dec2013 $2.12
Dec2012 $1.81
Dec2011 $1.57
Dec2010 $1.29
Dec2009 $1.04
Dec2008 $0.86
Dec2007 $0.61
Dec2006 $0.41
Dec2005 $0.48
Dec2004 $0.37
Dec2003 $0.29
Dec2002 $0.25

Recommended Reading:

Other ModernGraham posts about the company

Ansys Inc Valuation – March 2018 $ANSS
Ansys Inc Valuation – June 2016 $ANSS
Ansys Inc. Valuation – November 2015 Update $ANSS
The Best Companies of the Software Industry – August 2015
Ansys Inc. Analysis – Initial Coverage $ANSS

Other ModernGraham posts about related companies

Citrix Systems Inc Valuation – January 2019 $CTXS
Microsoft Corporation Valuation – November 2018 $MSFT
Cisco Systems Inc Valuation – November 2018 $CSCO
Kinaxis Inc Valuation – August 2018 $TSE:KXS
CSG Systems International Inc Valuation – August 2018 $CSGS
SPS Commerce Inc Valuation – August 2018 $SPSC
Synchronoss Technologies Inc Valuation – August 2018 $SNCR
ACI Worldwide Inc Valuation – July 2018 $ACIW
Akamai Technologies Inc Valuation – May 2018 $AKAM
Symantec Corp Valuation – April 2018 $SYMC

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.

Ansys Inc Valuation – March 2018 $ANSS

Company Profile (obtained from Marketwatch): ANSYS, Inc. develops and markets engineering simulation software and services. It is used by engineers, designers, researchers and students across industries and academia, including aerospace, automotive, materials and chemical processing, turbomachinery, consumer products, electronics, biomedical, energy, defense and others. Its product portfolio includes ANSYS Workbench, ANSYS Engineering Knowledge Management, computing product suite, geometry handling solutions, and meshing technology. The company was founded by John A. Swanson in 1970 and is headquartered in Canonsburg, PA.

ANSS Chart

ANSS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ANSS – 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 $14,235,345,520 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.09 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 112.24% Pass
6. Moderate PEmg Ratio PEmg < 20 49.92 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.48 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.09 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.36
MG Growth Estimate 6.18%
MG Value $70.11
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $48.73
MG Value based on 0% Growth $28.57
Market Implied Growth Rate 20.71%
Current Price $167.75
% of Intrinsic Value 239.27%

ANSYS, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. 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 $2.38 in 2014 to an estimated $3.36 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.71% 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 ANSYS, Inc. revealed the company was trading above its Graham Number of $50.57. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 49.92, which was below the industry average of 50.49, 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 $6.63.

ANSYS, 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) $6.63
Graham Number $50.57
PEmg 49.92
Current Ratio 2.09
PB Ratio 6.48
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 12/1/2017
Total Current Assets $1,270,266,000
Total Current Liabilities $608,553,000
Long-Term Debt $0
Total Assets $2,941,623,000
Intangible Assets $1,536,178,000
Total Liabilities $695,792,000
Shares Outstanding (Diluted Average) 86,710,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.26
Dec2017 $2.98
Dec2016 $2.99
Dec2015 $2.76
Dec2014 $2.70
Dec2013 $2.58
Dec2012 $2.14
Dec2011 $1.91
Dec2010 $1.64
Dec2009 $1.27
Dec2008 $1.29
Dec2007 $1.02
Dec2006 $0.19
Dec2005 $0.65
Dec2004 $0.53
Dec2003 $0.34
Dec2002 $0.31
Dec2001 $0.22
Dec2000 $0.25
Dec1999 $0.22
Dec1998 $0.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.36
Dec2017 $2.87
Dec2016 $2.76
Dec2015 $2.57
Dec2014 $2.38
Dec2013 $2.12
Dec2012 $1.81
Dec2011 $1.57
Dec2010 $1.29
Dec2009 $1.04
Dec2008 $0.86
Dec2007 $0.61
Dec2006 $0.41
Dec2005 $0.48
Dec2004 $0.37
Dec2003 $0.29
Dec2002 $0.25

Recommended Reading:

Other ModernGraham posts about the company

Ansys Inc. Valuation – November 2015 Update $ANSS
The Best Companies of the Software Industry – August 2015
Ansys Inc. Analysis – Initial Coverage $ANSS

Other ModernGraham posts about related companies

Citrix Systems Inc Valuation – February 2018 $CTXS
Microsoft Corp Valuation – February 2018 $MSFT
Cisco Systems Inc Valuation – February 2018 $CSCO
Symantec Corp Valuation – August 2017 $SYMC
Intuit Inc Valuation – March 2017 $INTU
CommVault Systems Inc Valuation – Initial Coverage $CVLT
Leidos Holdings Inc Valuation – Initial Coverage $LDOS
Constellation Software Inc Valuation – Initial Coverage $TSE:CSU
Adobe Systems Inc Valuation – February 2017 $ADBE
Synopsys Inc Valuation – Initial Coverage $SNPS

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.

Ansys Inc Valuation – June 2016 $ANSS

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

Company Profile (obtained from Google Finance): ANSYS, Inc. develops and markets engineering simulation software and services used by engineers, designers and students across industries and academia, including aerospace and defense, automotive, industrial equipment, electronics, biomedical, energy, materials and chemical processing, and semiconductors. The Company distributes its ANSYS suite of simulation technologies through a network of independent resellers and distributors, channel partners and direct sales offices across the world. The Company’s product portfolio consists of ANSYS Workbench, Structures, Fluids, Electronics, Multiphysics, Embedded Software, Systems, 3-D Direct Modeling and Academic. ANSYS Workbench is the framework upon which the Company’s suite of engineering simulation technologies is built. Its fluids product suite enables modeling of fluid flow and other related physical phenomena. Its electronics product suite provides field simulation software for designing electronic and electromechanical products.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of ANSS – June 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,569,394,819 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.36 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 150.56% Pass
6. Moderate PEmg Ratio PEmg < 20 29.83 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.53 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.36 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

ANSS value chart June 2016

EPSmg $2.93
MG Growth Estimate 9.36%
MG Value $79.81
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $42.52
MG Value based on 0% Growth $24.93
Market Implied Growth Rate 10.66%
Current Price $87.47
% of Intrinsic Value 109.59%

ANSYS, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.81 in 2012 to an estimated $2.93 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 10.66% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

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

Stage 3: Information for Further Research

ANSS charts June 2016

Net Current Asset Value (NCAV) $6.59
Graham Number $44.78
PEmg 29.83
Current Ratio 2.36
PB Ratio 3.53
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/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 3/1/2016
Total Current Assets $1,118,679,000
Total Current Liabilities $474,824,000
Long-Term Debt $0
Total Assets $2,758,828,000
Intangible Assets $1,543,806,000
Total Liabilities $524,925,000
Shares Outstanding (Diluted Average) 90,084,000

Earnings Per Share History

Next Fiscal Year Estimate $3.51
Dec2015 $2.76
Dec2014 $2.70
Dec2013 $2.58
Dec2012 $2.14
Dec2011 $1.91
Dec2010 $1.64
Dec2009 $1.27
Dec2008 $1.29
Dec2007 $1.02
Dec2006 $0.19
Dec2005 $0.65
Dec2004 $0.53
Dec2003 $0.34
Dec2002 $0.31
Dec2001 $0.22
Dec2000 $0.25
Dec1999 $0.22
Dec1998 $0.17
Dec1997 $0.11
Dec1996 $0.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.93
Dec2015 $2.57
Dec2014 $2.38
Dec2013 $2.12
Dec2012 $1.81
Dec2011 $1.57
Dec2010 $1.29
Dec2009 $1.04
Dec2008 $0.86
Dec2007 $0.61
Dec2006 $0.41
Dec2005 $0.48
Dec2004 $0.37
Dec2003 $0.29
Dec2002 $0.25
Dec2001 $0.22
Dec2000 $0.19

Recommended Reading:

Other ModernGraham posts about the company

Ansys Inc. Valuation – November 2015 Update $ANSS
The Best Companies of the Software Industry – August 2015
Ansys Inc. Analysis – Initial Coverage $ANSS

Other ModernGraham posts about related companies

Citrix Systems Inc Valuation – May 2016 $CTXS
Symantec Corp Valuation – February 2016 $SYMC
Microsoft Corp Valuation – February 2016 $MSFT
Cisco Systems Inc Valuation – February 2016 $CSCO
CA Inc Valuation – January 2016 Update $CA
Intuit Inc Valuation – January 2016 Update $INTU
Microsoft Corp Valuation – February 2016 $MSFT
Cisco Systems Inc Valuation – February 2016 $CSCO
CA Inc Valuation – January 2016 Update $CA
Intuit Inc Valuation – January 2016 Update $INTU

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.

Ansys Inc. Valuation – November 2015 Update $ANSS

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

Company Profile (obtained from Google Finance): ANSYS, Inc. (ANSYS) develops and markets engineering simulation software and services. The Company offers the suite to engineers, designers, researchers and students, and for industries and academia, including aerospace, automotive, manufacturing, electronics, biomedical, energy and defense. The Company’s product portfolio consists of ANSYS Workbench, Structures, Fluids, Electronics, Systems and Academic. ANSYS Workbench is the framework upon which the Company’s suite of engineering simulation technologies is built. The structures product suite offers simulation tools for product design and optimization. The fluids product suite enables modeling of fluid flow. The Company’s system simulation capability is to design automated products. The academic product suite provides a portfolio of academic products-based on usage tiers, such as associate, research and teaching.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of ANSS – November 2015

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,049,585,713 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.54 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 226.00% Pass
6. Moderate PEmg Ratio PEmg < 20 35.06 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.78 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.54 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

ANSS value Chart November 2015

EPSmg $2.61
MG Growth Estimate 9.92%
MG Value $73.85
Opinion Overvalued
MG Value based on 3% Growth $37.78
MG Value based on 0% Growth $22.15
Market Implied Growth Rate 13.28%
Current Price $91.34
% of Intrinsic Value 123.68%

Ansys Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the lack of dividends along with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.57 in 2011 to an estimated $2.61 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 13.28% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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

Stage 3: Information for Further Research

ANSS Charts November 2015

Net Current Asset Value (NCAV) $6.06
Graham Number $40.06
PEmg 35.06
Current Ratio 2.54
PB Ratio 3.78
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

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

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $1,045,264,000
Total Current Liabilities $411,957,000
Long-Term Debt $0
Total Assets $2,701,566,000
Intangible Assets $1,567,771,000
Total Liabilities $489,970,000
Shares Outstanding (Diluted Average) 91,593,000

Earnings Per Share History

Next Fiscal Year Estimate $2.87
Dec14 $2.70
Dec13 $2.58
Dec12 $2.14
Dec11 $1.91
Dec10 $1.64
Dec09 $1.27
Dec08 $1.29
Dec07 $1.02
Dec06 $0.19
Dec05 $0.65
Dec04 $0.53
Dec03 $0.34
Dec02 $0.31
Dec01 $0.22
Dec00 $0.25
Dec99 $0.22
Dec98 $0.17
Dec97 $0.11
Dec96 $0.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.61
Dec14 $2.38
Dec13 $2.12
Dec12 $1.81
Dec11 $1.57
Dec10 $1.29
Dec09 $1.04
Dec08 $0.86
Dec07 $0.61
Dec06 $0.41
Dec05 $0.48
Dec04 $0.37
Dec03 $0.29
Dec02 $0.25
Dec01 $0.22
Dec00 $0.19
Dec99 $0.14

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Software Industry – August 2015
Ansys Inc. Analysis – Initial Coverage $ANSS

Other ModernGraham posts about related companies

Yahoo! Inc. Valuation – November 2015 Update $YHOO
Microsoft Corporation Valuation – November 2015 Update $MSFT
Cisco Systems Inc. Valuation – November 2015 Update $CSCO
Alphabet Inc. Valuation – October 2015 Update $GOOG $GOOGL
Intuit Inc. Analysis – October 2015 Update $INTU
Oracle Corporation Analysis – October 2015 Update $ORCL
CA Inc. Analysis – August 2015 Update $CA
The Best Companies of the Software Industry – August 2015
Ansys Inc. Analysis – Initial Coverage $ANSS
Yahoo! Inc. Analysis – August 2015 Update $YHOO

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.

Ansys Inc. Analysis – Initial Coverage $ANSS

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

Company Profile (obtained from Google Finance): ANSYS, Inc. (ANSYS) develops and markets engineering simulation software and services. The Company offers the suite to engineers, designers, researchers and students, and for industries and academia, including aerospace, automotive, manufacturing, electronics, biomedical, energy and defense. The Company’s product portfolio consists of ANSYS Workbench, Structures, Fluids, Electronics, Systems and Academic. ANSYS Workbench is the framework upon which the Company’s suite of engineering simulation technologies is built. The structures product suite offers simulation tools for product design and optimization. The fluids product suite enables modeling of fluid flow. The Company’s system simulation capability is to design automated products. The academic product suite provides a portfolio of academic products-based on usage tiers, such as associate, research and teaching.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of ANSS – August 2015

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

What kind of Intelligent Investor are you?

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

Stage 2: Determination of Intrinsic Value

EPSmg 2.67
MG Growth Estimate 10.50%
MG Value $78.61
Opinion Overvalued
MG Value based on 3% Growth $38.65
MG Value based on 0% Growth $22.66
Market Implied Growth Rate 13.72%
Current Price $95.81
% of Intrinsic Value 121.87%

Ansys Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the lack of dividend payments, and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned with the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.57 in 2011 to an estimated $2.67 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 13.72% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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

Stage 3: Information for Further Research

ANSS charts August 2015

Net Current Asset Value (NCAV) $6.60
PEmg 35.95
Current Ratio 2.58
PB Ratio 3.92
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

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

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $1,110,355,000
Total Current Liabilities $430,310,000
Long-Term Debt $0
Total Assets $2,746,030,000
Intangible Assets $1,544,970,000
Total Liabilities $504,725,000
Shares Outstanding (Diluted Average) 91,726,000

Earnings Per Share History

Next Fiscal Year Estimate $3.05
Dec14 $2.70
Dec13 $2.58
Dec12 $2.14
Dec11 $1.91
Dec10 $1.64
Dec09 $1.27
Dec08 $1.29
Dec07 $1.02
Dec06 $0.19
Dec05 $0.65
Dec04 $0.53
Dec03 $0.34
Dec02 $0.31
Dec01 $0.22
Dec00 $0.25
Dec99 $0.22
Dec98 $0.17
Dec97 $0.11
Dec96 $0.02
Dec95 $0.00

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.67
Dec14 $2.38
Dec13 $2.12
Dec12 $1.81
Dec11 $1.57
Dec10 $1.29
Dec09 $1.04
Dec08 $0.86
Dec07 $0.61
Dec06 $0.41
Dec05 $0.48
Dec04 $0.37
Dec03 $0.29
Dec02 $0.25
Dec01 $0.22
Dec00 $0.19
Dec99 $0.14

Recommended Reading:

Other ModernGraham posts about the company

None

Other ModernGraham posts about related companies

Yahoo! Inc. Analysis – August 2015 Update $YHOO
Autodesk Inc. Analysis – August 2015 Update $ADSK
Microsoft Corporation Analysis – August 2015 Update $MSFT
Cisco Systems Inc. Analysis – August 2015 Update $CSCO
Google Inc. Analysis – July 2015 Update $GOOGL
Intuit Inc. Analysis – July 2015 Update $INTU
Oracle Corporation Analysis – July 2015 Update $ORCL
Adobe Systems Inc. Analysis – 2015 Update $ADBE
CA Inc. Stock Analysis – May 2015 Quarterly Update $CA
Yahoo Inc. Quarterly Valuation – May 2015 $YHOO

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.  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.

Synopsys Inc Valuation – February 2019 $SNPS

Company Profile (excerpt from Reuters): Synopsys, Inc., incorporated on May 7, 1987, provides software, intellectual property (IP) and services. The Company supplies the electronic design automation (EDA) software that engineers use to design and test integrated circuits (ICs), also known as chips. The Company also offers IP products, which are pre-designed circuits that engineers use as components of larger chip designs rather than designing those circuits themselves. The Company provides software and hardware used to develop the electronic systems that incorporate chips and the software that runs on them. The Company provides technical services to support its solutions and help its customers develop chips and electronic systems. The Company is also a provider of software tools that developers use to develop software code in a range of industries, including electronics, financial services, energy and industrials. The Company offers products and services in four categories: core EDA; IP, Systems and Software Integrity; Manufacturing Solutions, and Professional Services and Other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SNPS – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,801,985,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.73 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 86.56% Pass
6. Moderate PEmg Ratio PEmg < 20 37.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.38 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 0.73 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -0.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.66
MG Growth Estimate 11.76%
MG Value $85.11
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $38.53
MG Value based on 0% Growth $22.59
Market Implied Growth Rate 14.38%
Current Price $99.01
% of Intrinsic Value 116.34%

Synopsys, 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, 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, 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 $1.49 in 2015 to an estimated $2.66 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.38% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Synopsys, Inc. revealed the company was trading above its Graham Number of $46.99. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 37.26, which was below the industry average of 56.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.24.

Synopsys, 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) -$7.24
Graham Number $46.99
PEmg 37.26
Current Ratio 0.73
PB Ratio 4.38
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 10/1/2018
Total Current Assets $1,543,797,000
Total Current Liabilities $2,102,415,000
Long-Term Debt $125,535,000
Total Assets $6,145,974,000
Intangible Assets $3,503,653,000
Total Liabilities $2,660,959,000
Shares Outstanding (Diluted Average) 154,218,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.21
Oct2018 $2.82
Oct2017 $0.88
Oct2016 $1.73
Oct2015 $1.43
Oct2014 $1.64
Oct2013 $1.58
Oct2012 $1.21
Oct2011 $1.47
Oct2010 $1.56
Oct2009 $1.15
Oct2008 $1.29
Oct2007 $0.87
Oct2006 $0.17
Oct2005 -$0.12
Oct2004 $0.47
Oct2003 $0.91
Oct2002 -$1.51
Oct2001 $0.44
Oct2000 $0.69
Sep1999 $1.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.66
Oct2018 $1.82
Oct2017 $1.36
Oct2016 $1.58
Oct2015 $1.49
Oct2014 $1.51
Oct2013 $1.43
Oct2012 $1.35
Oct2011 $1.37
Oct2010 $1.21
Oct2009 $0.92
Oct2008 $0.71
Oct2007 $0.43
Oct2006 $0.14
Oct2005 $0.10
Oct2004 $0.20
Oct2003 $0.15

Recommended Reading:

Other ModernGraham posts about the company

Synopsys Inc Valuation – April 2018 $SNPS
Synopsys Inc Valuation – Initial Coverage $SNPS

Other ModernGraham posts about related companies

Intuit Inc Valuation – February 2019 $INTU
Adobe Inc Valuation – February 2019 $ADBE
Autodesk Inc Valuation – February 2019 $ADSK
F5 Networks Inc Valuation – February 2019 $FFIV
Cadence Design Systems Inc Valuation – January 2019 $CDNS
Oracle Corporation Valuation – January 2019 $ORCL
Red Hat Inc Valuation – January 2019 $RHT
Alphabet Inc Valuation – January 2019 $GOOG $GOOGL
Ansys Inc Valuation – January 2019 $ANSS
Citrix Systems Inc Valuation – January 2019 $CTXS

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.

Symantec Corp Valuation – February 2019 $SYMC

Company Profile (excerpt from Reuters): Symantec Corporation, incorporated on April 19, 1988, provides security and information management solutions. The Company operates its business on a global civilian cyber intelligence threat network and tracks various threats across the Internet from mobile devices, endpoints, and servers across the world. The Company is developing solutions for cloud, threat protection, information protection and cyber security services. The Company operates through two segments: Consumer Security and Enterprise Security. The Company’s services include business critical services, consulting services, customer success services, cyber security services and education services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SYMC – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,407,951,765 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.02 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 -4.35% Fail
6. Moderate PEmg Ratio PEmg < 20 14.88 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.44 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 1.02 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 54.90 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.51
MG Growth Estimate 3.38%
MG Value $23.12
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $21.96
MG Value based on 0% Growth $12.87
Market Implied Growth Rate 3.19%
Current Price $22.54
% of Intrinsic Value 97.49%

Symantec Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings 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, and the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.24 in 2015 to an estimated $1.51 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 3.19% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Symantec Corporation revealed the company was trading above its Graham Number of $16.76. The company pays a dividend of $0.3 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 14.88, which was below the industry average of 56.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.69.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$10.69
Graham Number $16.76
PEmg 14.88
Current Ratio 1.02
PB Ratio 2.44
Current Dividend $0.30
Dividend Yield 1.33%
Number of Consecutive Years of Dividend Growth 0

 

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,724,000,000
Total Current Liabilities $3,643,000,000
Long-Term Debt $4,447,000,000
Total Assets $16,456,000,000
Intangible Assets $10,673,000,000
Total Liabilities $10,550,000,000
Shares Outstanding (Diluted Average) 638,540,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.55
Mar2018 $1.70
Mar2017 -$0.17
Mar2016 $3.71
Mar2015 $1.26
Mar2014 $1.28
Mar2013 $1.06
Mar2012 $1.59
Mar2011 $0.76
Mar2010 $0.87
Mar2009 -$8.17
Mar2008 $0.52
Mar2007 $0.41
Mar2006 $0.15
Mar2005 $0.74
Mar2004 $0.54
Mar2003 $0.39
Mar2002 -$0.05
Mar2001 $0.12
Mar2000 $0.34
Mar1999 $0.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.51
Mar2018 $1.52
Mar2017 $1.43
Mar2016 $2.08
Mar2015 $1.24
Mar2014 $1.19
Mar2013 $0.50
Mar2012 -$0.15
Mar2011 -$1.05
Mar2010 -$1.72
Mar2009 -$2.43
Mar2008 $0.45
Mar2007 $0.42
Mar2006 $0.40
Mar2005 $0.47
Mar2004 $0.31
Mar2003 $0.19

Recommended Reading:

Other ModernGraham posts about the company

Symantec Corp Valuation – April 2018 $SYMC
Symantec Corp Valuation – August 2017 $SYMC
10 Undervalued Stocks for the Enterprising Investor – December 2016
21 Best Undervalued Stocks of the Week – 8/27/16
Symantec Corporation Valuation – August 2016 $SYMC

Other ModernGraham posts about related companies

Intuit Inc Valuation – February 2019 $INTU
Adobe Inc Valuation – February 2019 $ADBE
Autodesk Inc Valuation – February 2019 $ADSK
F5 Networks Inc Valuation – February 2019 $FFIV
Cadence Design Systems Inc Valuation – January 2019 $CDNS
Oracle Corporation Valuation – January 2019 $ORCL
Red Hat Inc Valuation – January 2019 $RHT
Alphabet Inc Valuation – January 2019 $GOOG $GOOGL
Ansys Inc Valuation – January 2019 $ANSS
Citrix Systems Inc Valuation – January 2019 $CTXS

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.

Intuit Inc Valuation – February 2019 $INTU

Company Profile (excerpt from Reuters): Intuit Inc., incorporated on February 1, 1993, is a provider of business and financial management solutions for small businesses, consumers and accounting professionals. The Company operates through three segments: Small Business, Consumer Tax and ProConnect. The Small Business segment serves and advises small businesses and the accounting professionals and includes QuickBooks financial and business management online services and desktop software, payroll solutions, and payment processing solutions. The Small Business segment also includes third-party applications that integrate with the Company’s offerings. The Consumer Tax segment targets consumers and includes TurboTax income tax preparation products and services. The ProConnect segment targets professional accountants in the United States and Canada. Its ProConnect professional tax offerings include Lacerte, ProSeries, ProFile and ProConnect Tax Online.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTU – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $57,448,073,834 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.41 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 132.03% Pass
6. Moderate PEmg Ratio PEmg < 20 47.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 21.05 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.58 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.70
MG Growth Estimate 15.00%
MG Value $180.90
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $68.13
MG Value based on 0% Growth $39.94
Market Implied Growth Rate 19.35%
Current Price $221.79
% of Intrinsic Value 122.60%

Intuit Inc. is suitable for the Enterprising Investor but not 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 is only concerned with the low current ratio. 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 $2.3 in 2015 to an estimated $4.7 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 19.35% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Intuit Inc. revealed the company was trading above its Graham Number of $36.26. The company pays a dividend of $1.56 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 47.2, which was below the industry average of 56.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.33.

Intuit 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) $0.33
Graham Number $36.26
PEmg 47.20
Current Ratio 1.41
PB Ratio 21.05
Current Dividend $1.56
Dividend Yield 0.70%
Number of Consecutive Years of Dividend Growth 4

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 $2,232,000,000
Total Current Liabilities $1,586,000,000
Long-Term Debt $375,000,000
Total Assets $4,928,000,000
Intangible Assets $1,665,000,000
Total Liabilities $2,146,000,000
Shares Outstanding (Diluted Average) 264,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.42
Jul2018 $4.64
Jul2017 $3.72
Jul2016 $3.69
Jul2015 $1.28
Jul2014 $3.12
Jul2013 $2.83
Jul2012 $2.60
Jul2011 $2.00
Jul2010 $1.77
Jul2009 $1.35
Jul2008 $1.41
Jul2007 $1.24
Jul2006 $1.16
Jul2005 $1.01
Jul2004 $0.79
Jul2003 $0.81
Jul2002 $0.32
Jul2001 -$0.20
Jul2000 $0.73
Jul1999 $0.97

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.70
Jul2018 $3.66
Jul2017 $3.08
Jul2016 $2.75
Jul2015 $2.30
Jul2014 $2.70
Jul2013 $2.36
Jul2012 $2.03
Jul2011 $1.68
Jul2010 $1.47
Jul2009 $1.30
Jul2008 $1.22
Jul2007 $1.08
Jul2006 $0.94
Jul2005 $0.74
Jul2004 $0.57
Jul2003 $0.48

Recommended Reading:

Other ModernGraham posts about the company

Intuit Inc Valuation – April 2018 $INTU
Intuit Inc Valuation – March 2017 $INTU
Intuit Inc Valuation – January 2016 Update $INTU
Intuit Inc. Analysis – October 2015 Update $INTU
Intuit Inc. Analysis – July 2015 Update $INTU

Other ModernGraham posts about related companies

Autodesk Inc Valuation – February 2019 $ADSK
F5 Networks Inc Valuation – February 2019 $FFIV
Cadence Design Systems Inc Valuation – January 2019 $CDNS
Oracle Corporation Valuation – January 2019 $ORCL
Red Hat Inc Valuation – January 2019 $RHT
Alphabet Inc Valuation – January 2019 $GOOG $GOOGL
Ansys Inc Valuation – January 2019 $ANSS
Citrix Systems Inc Valuation – January 2019 $CTXS
Microsoft Corporation Valuation – November 2018 $MSFT
Cisco Systems Inc Valuation – November 2018 $CSCO

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.

Adobe Inc Valuation – February 2019 $ADBE

Company Profile (excerpt from Reuters): Adobe Inc., formerly Adobe Systems Incorporated, incorporated on May 9, 1997, is a software company. The Company offers a line of products and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and experiences across multiple operating systems, devices and media. The Company operates through three segments: Digital Media, Digital Experience and Publishing. The Company markets and licenses its products and services directly to enterprise customers through its sales force and to end users through application stores and its own Website at www.adobe.com. It offers various products through a software-as-a-service (SaaS) model or a managed services model (both of which are referred to as a hosted or cloud-based model), as well as through term subscription and pay-per-use models.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADBE – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $122,633,826,630 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.13 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 241.00% Pass
6. Moderate PEmg Ratio PEmg < 20 49.88 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 13.28 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 1.13 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 7.42 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.03
MG Growth Estimate 15.00%
MG Value $193.58
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $72.91
MG Value based on 0% Growth $42.74
Market Implied Growth Rate 20.69%
Current Price $250.82
% of Intrinsic Value 129.57%

Adobe 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, 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, 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 in 2015 to an estimated $5.03 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.69% 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 Adobe Inc revealed the company was trading above its Graham Number of $57.72. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 49.88, which was below the industry average of 56.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.18.

Adobe 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) -$9.18
Graham Number $57.72
PEmg 49.88
Current Ratio 1.13
PB Ratio 13.28
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 11/1/2018
Total Current Assets $4,857,039,000
Total Current Liabilities $4,301,126,000
Long-Term Debt $4,124,800,000
Total Assets $18,768,682,000
Intangible Assets $12,650,049,000
Total Liabilities $9,406,568,000
Shares Outstanding (Diluted Average) 495,611,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.72
Nov2018 $5.20
Nov2017 $3.38
Nov2016 $2.32
Nov2015 $1.24
Nov2014 $0.53
Nov2013 $0.56
Nov2012 $1.66
Nov2011 $1.65
Nov2010 $1.47
Nov2009 $0.73
Nov2008 $1.59
Nov2007 $1.21
Nov2006 $0.83
Nov2005 $1.19
Nov2004 $0.91
Nov2003 $0.55
Nov2002 $0.40
Nov2001 $0.42
Nov2000 $0.57
Nov1999 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.03
Nov2018 $3.30
Nov2017 $2.10
Nov2016 $1.40
Nov2015 $1.00
Nov2014 $0.98
Nov2013 $1.20
Nov2012 $1.49
Nov2011 $1.38
Nov2010 $1.22
Nov2009 $1.10
Nov2008 $1.24
Nov2007 $1.02
Nov2006 $0.88
Nov2005 $0.83
Nov2004 $0.62
Nov2003 $0.48

Recommended Reading:

Other ModernGraham posts about the company

Adobe Systems Inc Valuation – April 2018 $ADBE
Adobe Systems Inc Valuation – February 2017 $ADBE
5 of the Worst Stocks to Invest In – December 2016
Adobe Systems Inc Valuation – August 2016 $ADBE
5 Speculative and Overvalued Companies to Avoid – June 2015

Other ModernGraham posts about related companies

Autodesk Inc Valuation – February 2019 $ADSK
F5 Networks Inc Valuation – February 2019 $FFIV
Cadence Design Systems Inc Valuation – January 2019 $CDNS
Oracle Corporation Valuation – January 2019 $ORCL
Red Hat Inc Valuation – January 2019 $RHT
Alphabet Inc Valuation – January 2019 $GOOG $GOOGL
Ansys Inc Valuation – January 2019 $ANSS
Citrix Systems Inc Valuation – January 2019 $CTXS
Microsoft Corporation Valuation – November 2018 $MSFT
Cisco Systems Inc Valuation – November 2018 $CSCO

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.

Autodesk Inc Valuation – February 2019 $ADSK

Company Profile (excerpt from Reuters): Autodesk, Inc. (Autodesk), incorporated on May 10, 1994, is a design software and services company, offering customers productive business solutions through technology products and services. The Company serves customers in the architecture, engineering and construction; product design and manufacturing, and digital media and entertainment industries. The Company’s segments include Architecture, Engineering and Construction (AEC), Platform Solutions and Emerging Business (PSEB), Manufacturing (MFG), and Media and Entertainment (M&E). The Company’s software products enable its customers to experience their ideas before they are real by allowing them to imagine, design and create the ideas and to visualize, simulate and analyze performance early in the design process by creating digital prototypes. The Company’s product development and manufacturing software provides manufacturers in automotive, transportation, industrial machinery, consumer products and building products with digital engineering solutions. The Company’s product offerings include AutoCAD, AutoCAD LT, Industry Collections, 3ds Max, Maya, Revit, Inventor, AutoCAD Civil 3D, CAM Solutions, Fusion 360, BIM 360 and Shotgun.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADSK – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $33,313,459,123 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 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 -330.80% Fail
6. Moderate PEmg Ratio PEmg < 20 -103.19 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -98.46 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 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -4.01 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.47
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$21.38
MG Value based on 0% Growth -$12.53
Market Implied Growth Rate -55.84%
Current Price $152.17
% of Intrinsic Value N/A

Autodesk, 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, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth 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 seeing its EPSmg (normalized earnings) decline from $0.82 in 2015 to an estimated $-1.47 for 2019. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Autodesk, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -103.19, which was below the industry average of 56.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.52.

Autodesk, 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) -$11.52
Graham Number $0.00
PEmg -103.19
Current Ratio 0.80
PB Ratio -98.46
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 10/1/2018
Total Current Assets $1,590,000,000
Total Current Liabilities $1,985,500,000
Long-Term Debt $1,587,800,000
Total Assets $3,774,400,000
Intangible Assets $1,694,700,000
Total Liabilities $4,112,700,000
Shares Outstanding (Diluted Average) 218,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.28
Jan2018 -$2.58
Jan2017 -$2.61
Jan2016 -$1.46
Jan2015 $0.35
Jan2014 $1.00
Jan2013 $1.07
Jan2012 $1.22
Jan2011 $0.90
Jan2010 $0.25
Jan2009 $0.80
Jan2008 $1.47
Jan2007 $1.19
Jan2006 $1.35
Jan2005 $0.90
Jan2004 $0.52
Jan2003 $0.14
Jan2002 $0.40
Jan2001 $0.40
Jan2000 $0.04
Jan1999 $0.41

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.47
Jan2018 -$1.73
Jan2017 -$0.98
Jan2016 $0.03
Jan2015 $0.82
Jan2014 $1.00
Jan2013 $0.95
Jan2012 $0.90
Jan2011 $0.80
Jan2010 $0.84
Jan2009 $1.14
Jan2008 $1.23
Jan2007 $1.02
Jan2006 $0.84
Jan2005 $0.55
Jan2004 $0.35
Jan2003 $0.27

Recommended Reading:

Other ModernGraham posts about the company

Autodesk Inc Valuation – April 2018 $ADSK
Autodesk Inc Valuation – December 2016 $ADSK
5 Speculative and Overvalued Companies to Avoid – August 2015
Autodesk Inc. Analysis – August 2015 Update $ADSK
47 Companies in the Spotlight This Week – 5/16/15

Other ModernGraham posts about related companies

F5 Networks Inc Valuation – February 2019 $FFIV
Cadence Design Systems Inc Valuation – January 2019 $CDNS
Oracle Corporation Valuation – January 2019 $ORCL
Red Hat Inc Valuation – January 2019 $RHT
Alphabet Inc Valuation – January 2019 $GOOG $GOOGL
Ansys Inc Valuation – January 2019 $ANSS
Citrix Systems Inc Valuation – January 2019 $CTXS
Microsoft Corporation Valuation – November 2018 $MSFT
Cisco Systems Inc Valuation – November 2018 $CSCO
Kinaxis Inc Valuation – August 2018 $TSE:KXS

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