ATN International Inc Valuation – Initial Coverage $ATNI

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

Company Profile (obtained from Google Finance): ATN International, Inc. (ATN), formerly Atlantic Tele-Network, Inc., is a holding company. The Company’s segments include U.S. Telecom, International Telecom and Renewable Energy. In the United States, it provides wholesale wireless voice and data roaming services in rural markets to national, regional, local and selected international wireless carriers. Its wholesale networks are located principally in the western United States. It provides wireless voice and data service to retail and business customers in Bermuda under the One name, in Guyana under the GTT name and in the United States Virgin Islands under the Innovative and Choice brand names. The Company offers voice services that include local exchange, regional and long distance calling and voice messaging services in Bermuda, Guyana, the United States Virgin Islands, and in other smaller markets in the Caribbean and the United States. It offers services, which include Wireless, Wireline and Renewable Energy.

ATNI Chart

ATNI data by YCharts

[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. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of ATNI – August 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $945,750,205 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.27 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -52.12% Fail
6. Moderate PEmg Ratio PEmg < 20 22.00 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.39 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.27 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.78 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 Fail

Stage 2: Determination of Intrinsic Value

EPSmg $2.66
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $38.50
MG Value based on 0% Growth $22.57
Market Implied Growth Rate 6.75%
Current Price $58.43
% of Intrinsic Value N/A

ATN International Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the  small size, insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years.  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 seeing its EPSmg (normalized earnings) decline from $8.17 in 2013 to an estimated $2.66 for 2017.  This level of demonstrated earnings growth does not support the market’s implied estimate of 6.75% 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 ATN International Inc revealed the company was trading above its Graham Number of $38.74.  The company pays a dividend of $1.32 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 22, which was below the industry average of 37.96, 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 $-10.78.

ATN International 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) -$10.78
Graham Number $38.74
PEmg 22.00
Current Ratio 2.27
PB Ratio 1.39
Current Dividend $1.32
Dividend Yield 2.26%
Number of Consecutive Years of Dividend Growth 10

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2017
Total Current Assets $344,335,000
Total Current Liabilities $151,891,000
Long-Term Debt $149,832,000
Total Assets $1,201,476,000
Intangible Assets $171,945,000
Total Liabilities $519,767,000
Shares Outstanding (Diluted Average) 16,274,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.59
Dec2016 $0.75
Dec2015 $1.05
Dec2014 $3.01
Dec2013 $19.71
Dec2012 $3.13
Dec2011 $1.41
Dec2010 $2.48
Dec2009 $2.32
Dec2008 $2.28
Dec2007 $2.48
Dec2006 $1.72
Dec2005 $1.10
Dec2004 $0.99
Dec2003 $0.98
Dec2002 $0.75
Dec2001 $0.73
Dec2000 $1.00
Dec1999 $0.82
Dec1998 $1.29
Dec1997 $0.68

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.66
Dec2016 $3.97
Dec2015 $5.61
Dec2014 $7.24
Dec2013 $8.17
Dec2012 $2.38
Dec2011 $2.06
Dec2010 $2.35
Dec2009 $2.18
Dec2008 $1.98
Dec2007 $1.70
Dec2006 $1.25
Dec2005 $0.98
Dec2004 $0.91
Dec2003 $0.86
Dec2002 $0.84
Dec2001 $0.89

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Windstream Holdings Inc Valuation – August 2016 $WIN
Verizon Communications Inc Valuation – July 2016 $VZ
AT&T Inc Valuation – July 2016 $T
Harris Corporation Valuation – February 2016 $HRS
CenturyLink Inc Valuation – February 2016 $CTL
Frontier Communications Corp Valuation – November 2015 Update $FTR
Harris Corporation Analysis – September 2015 Update $HRS
Arris Group Inc. Analysis – Initial Coverage $ARRS
Level 3 Communications Inc. Analysis – Initial Coverage $LVLT
Windstream Holdings Analysis – 2015 Update $WIN

Disclaimer:

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

American Tower Corp Valuation – June 2018 $AMT

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

AMT Chart

AMT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMT – 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 $61,178,729,988 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.62 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 200.00% Pass
6. Moderate PEmg Ratio PEmg < 20 57.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.75 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 0.62 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.63 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 $2.40
MG Growth Estimate 8.25%
MG Value $59.98
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $34.79
MG Value based on 0% Growth $20.39
Market Implied Growth Rate 24.62%
Current Price $138.52
% of Intrinsic Value 230.94%

American Tower Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.55 in 2014 to an estimated $2.4 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 24.62% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into American Tower Corp revealed the company was trading above its Graham Number of $30.87. The company pays a dividend of $2.62 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 57.73, which was above the industry average of 37.78. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-56.18.

American Tower Corp 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) -$56.18
Graham Number $30.87
PEmg 57.73
Current Ratio 0.62
PB Ratio 8.75
Current Dividend $2.62
Dividend Yield 1.89%
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 $2,797,400,000
Total Current Liabilities $4,544,700,000
Long-Term Debt $18,568,800,000
Total Assets $34,372,700,000
Intangible Assets $17,587,300,000
Total Liabilities $27,431,400,000
Shares Outstanding (Diluted Average) 438,520,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.91
Dec2017 $2.67
Dec2016 $1.98
Dec2015 $1.41
Dec2014 $2.00
Dec2013 $1.38
Dec2012 $1.60
Dec2011 $0.99
Dec2010 $0.92
Dec2009 $0.61
Dec2008 $0.84
Dec2007 $0.13
Dec2006 $0.06
Dec2005 -$0.60
Dec2004 -$1.10
Dec2003 -$1.56
Dec2002 -$5.95
Dec2001 -$2.35
Dec2000 -$1.15
Dec1999 -$0.34
Dec1998 -$0.59

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.40
Dec2017 $2.06
Dec2016 $1.73
Dec2015 $1.56
Dec2014 $1.55
Dec2013 $1.25
Dec2012 $1.12
Dec2011 $0.82
Dec2010 $0.66
Dec2009 $0.42
Dec2008 $0.17
Dec2007 -$0.31
Dec2006 -$0.97
Dec2005 -$1.76
Dec2004 -$2.36
Dec2003 -$2.75
Dec2002 -$2.93

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Charter Communications Inc Valuation – May 2018 $CHTR
DISH Network Corp Valuation – Initial Coverage $DISH
AT&T Inc Valuation – April 2018 $T
Comcast Corporation Valuation – March 2018 $CMCSA
Spok Holdings Inc Valuation – March 2018 $SPOK
SBA Communications Corp Valuation – Initial Coverage $SBAC
Harris Corporation Valuation – February 2018 $HRS
Verizon Communications Inc Valuation – February 2018 $VZ
Mitel Networks Corp Valuation – Initial Coverage $TSE:MNW
ATN International Inc Valuation – Initial Coverage $ATNI

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.

Charter Communications Inc Valuation – May 2018 $CHTR

Company Profile (excerpt from Reuters): Charter Communications, Inc., incorporated on July 9, 2003, is a holding company. The Company is a cable operator in the United States and a broadband communications services company. The Company operates in cable services segment. As of December 31, 2016, the Company was engaged in providing video, Internet and voice services to approximately 26.2 million residential and business customers. In addition, it sells video and online advertising inventory to local, regional and national advertising customers and fiber-delivered communications and managed information technology (IT) solutions to enterprise customers. The Company also owns and operates regional sports networks and local sports, news and lifestyle channels and sells security and home management services to the residential marketplace.

CHTR Chart

CHTR data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CHTR – 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 $62,530,062,700 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.21 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 -949.17% Fail
6. Moderate PEmg Ratio PEmg < 20 22.11 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.75 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 0.21 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.35 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 $12.27
MG Growth Estimate 15.00%
MG Value $472.50
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $177.95
MG Value based on 0% Growth $104.32
Market Implied Growth Rate 6.80%
Current Price $271.29
% of Intrinsic Value 57.42%

Charter Communications, 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 ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years, 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 Undervalued after growing its EPSmg (normalized earnings) from $-2.44 in 2014 to an estimated $12.27 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.8% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Charter Communications, Inc. revealed the company was trading above its Graham Number of $70.94. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 22.11, which was below the industry average of 36.05, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-420.16.

Charter Communications, 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) -$420.16
Graham Number $70.94
PEmg 22.11
Current Ratio 0.21
PB Ratio 1.75
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 $2,398,000,000
Total Current Liabilities $11,602,000,000
Long-Term Debt $67,609,000,000
Total Assets $146,151,000,000
Intangible Assets $108,625,000,000
Total Liabilities $107,383,000,000
Shares Outstanding (Diluted Average) 249,870,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.43
Dec2017 $34.09
Dec2016 $15.94
Dec2015 -$2.68
Dec2014 -$1.88
Dec2013 -$1.83
Dec2012 -$3.37
Dec2011 -$3.75
Dec2010 -$2.31
Dec2009 $0.00
Dec2008 -$7.26
Dec2007 -$4.61
Dec2006 -$4.57
Dec2005 -$3.46
Dec2004 -$16.00
Dec2003 -$0.91
Dec2002 -$9.46
Dec2001 -$4.79
Dec2000 -$4.20
Dec1999 -$2.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $12.27
Dec2017 $14.71
Dec2016 $3.75
Dec2015 -$2.46
Dec2014 -$2.44
Dec2013 -$2.57
Dec2012 -$3.07
Dec2011 -$3.14
Dec2010 -$3.14
Dec2009 -$3.70
Dec2008 -$6.09
Dec2007 -$5.64
Dec2006 -$6.40
Dec2005 -$7.18
Dec2004 -$8.39
Dec2003 -$4.51
Dec2002 -$5.60

Recommended Reading:

Other ModernGraham posts about the company

Charter Communications Inc Valuation – Initial Coverage $CHTR

Other ModernGraham posts about related companies

DISH Network Corp Valuation – Initial Coverage $DISH
AT&T Inc Valuation – April 2018 $T
Comcast Corporation Valuation – March 2018 $CMCSA
Spok Holdings Inc Valuation – March 2018 $SPOK
SBA Communications Corp Valuation – Initial Coverage $SBAC
Harris Corporation Valuation – February 2018 $HRS
Verizon Communications Inc Valuation – February 2018 $VZ
Mitel Networks Corp Valuation – Initial Coverage $TSE:MNW
ATN International Inc Valuation – Initial Coverage $ATNI
CenturyLink Inc Valuation – July 2017 $CTL

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.

DISH Network Corp Valuation – Initial Coverage $DISH

Company Profile (excerpt from Reuters): DISH Network Corporation, incorporated on April 26, 1995, is a holding company. The Company operates through two segments: Pay-TV and Broadband, and Wireless. The Company offers pay-TV services under the DISH brand and the Sling brand (collectively Pay-TV services).

DISH Chart

DISH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DISH – April 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 $17,970,869,211 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.68 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 30.67% Fail
6. Moderate PEmg Ratio PEmg < 20 14.11 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.92 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 0.68 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.81 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 $2.73
MG Growth Estimate 5.16%
MG Value $51.37
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $39.57
MG Value based on 0% Growth $23.19
Market Implied Growth Rate 2.81%
Current Price $38.51
% of Intrinsic Value 74.97%

DISH Network Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings 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 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 Undervalued after growing its EPSmg (normalized earnings) from $2.03 in 2014 to an estimated $2.73 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.81% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into DISH Network Corp revealed the company was trading above its Graham Number of $25.48. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 14.11, which was below the industry average of 41.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.21.

DISH Network Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.21
Graham Number $25.48
PEmg 14.11
Current Ratio 0.68
PB Ratio 2.92
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 $3,285,023,000
Total Current Liabilities $4,828,004,000
Long-Term Debt $15,134,441,000
Total Assets $29,773,766,000
Intangible Assets $23,725,789,000
Total Liabilities $22,836,352,000
Shares Outstanding (Diluted Average) 525,467,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.94
Dec2017 $4.07
Dec2016 $3.15
Dec2015 $1.73
Dec2014 $2.04
Dec2013 $1.76
Dec2012 $1.41
Dec2011 $3.39
Dec2010 $2.20
Dec2009 $1.42
Dec2008 $1.98
Dec2007 $1.68
Dec2006 $1.37
Dec2005 $3.22
Dec2004 $0.46
Dec2003 $0.46
Dec2002 -$0.86
Dec2001 -$0.45
Dec2000 -$1.38
Dec1999 -$1.92
Dec1998 -$0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.73
Dec2017 $2.93
Dec2016 $2.25
Dec2015 $1.89
Dec2014 $2.03
Dec2013 $2.03
Dec2012 $2.14
Dec2011 $2.38
Dec2010 $1.82
Dec2009 $1.73
Dec2008 $1.84
Dec2007 $1.66
Dec2006 $1.41
Dec2005 $1.14
Dec2004 -$0.05
Dec2003 -$0.48
Dec2002 -$0.99

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

AT&T Inc Valuation – April 2018 $T
Spok Holdings Inc Valuation – March 2018 $SPOK
SBA Communications Corp Valuation – Initial Coverage $SBAC
Harris Corporation Valuation – February 2018 $HRS
Verizon Communications Inc Valuation – February 2018 $VZ
Mitel Networks Corp Valuation – Initial Coverage $TSE:MNW
ATN International Inc Valuation – Initial Coverage $ATNI
CenturyLink Inc Valuation – July 2017 $CTL
Telephone & Data Systems Inc Valuation – Initial Coverage $TDS
Lumos Networks Corp Valuation – Initial Coverage $LMOS

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.

AT&T Inc Valuation – April 2018 $T

Company Profile (excerpt from Reuters): AT&T Inc., incorporated October 5, 1983, is a holding company. The Company and its subsidiaries provide communications and digital entertainment services in the United States and the world. The Company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility and International. The Company offers its services and products to consumers in the United States, Mexico and Latin America and to businesses and other providers of telecommunications services worldwide. The Company also owns and operates three regional Television sports networks, and retains non-controlling interests in another regional sports network and a network dedicated to game-related programming, as well as Internet interactive game playing. The services and products offered by the Company vary by market, and include wireless communications, data/broadband and Internet services, digital video services, local and long-distance telephone services, telecommunications equipment, managed networking, and wholesale services. Its subsidiaries include AT&T Mobility and SKY Brasil Servicos Ltda.

T Chart

T data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of T – April 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 $218,945,609,378 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.97 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 67.00% Pass
6. Moderate PEmg Ratio PEmg < 20 11.23 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.56 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 0.97 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -56.16 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 $3.17
MG Growth Estimate 10.24%
MG Value $92.00
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $46.03
MG Value based on 0% Growth $26.98
Market Implied Growth Rate 1.36%
Current Price $35.65
% of Intrinsic Value 38.75%

AT&T Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $3.17 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into AT&T Inc. revealed the company was trading below its Graham Number of $41.02. The company pays a dividend of $1.97 per share, for a yield of 5.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.23, which was below the industry average of 41.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-36.26.

AT&T Inc. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$36.26
Graham Number $41.02
PEmg 11.23
Current Ratio 0.97
PB Ratio 1.56
Current Dividend $1.97
Dividend Yield 5.53%
Number of Consecutive Years of Dividend Growth 14

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 $79,146,000,000
Total Current Liabilities $81,389,000,000
Long-Term Debt $125,972,000,000
Total Assets $444,097,000,000
Intangible Assets $219,725,000,000
Total Liabilities $303,236,000,000
Shares Outstanding (Diluted Average) 6,180,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.26
Dec2017 $4.76
Dec2016 $2.10
Dec2015 $2.37
Dec2014 $1.24
Dec2013 $3.42
Dec2012 $1.25
Dec2011 $0.66
Dec2010 $3.35
Dec2009 $2.05
Dec2008 $2.16
Dec2007 $1.94
Dec2006 $1.89
Dec2005 $1.42
Dec2004 $1.77
Dec2003 $2.56
Dec2002 $1.69
Dec2001 $2.07
Dec2000 $2.24
Dec1999 $2.36
Dec1998 $2.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.17
Dec2017 $3.01
Dec2016 $2.12
Dec2015 $2.02
Dec2014 $1.89
Dec2013 $2.19
Dec2012 $1.68
Dec2011 $1.94
Dec2010 $2.48
Dec2009 $1.99
Dec2008 $1.92
Dec2007 $1.84
Dec2006 $1.82
Dec2005 $1.82
Dec2004 $2.04
Dec2003 $2.17
Dec2002 $2.03

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – February 2015
40 Companies in the Spotlight This Week – 2/21/15
5 Most Overvalued Dow Components – February 2015
AT&T Inc. Annual Valuation – 2015 $T
5 Most Overvalued Dow Components – January 2015

Other ModernGraham posts about related companies

Spok Holdings Inc Valuation – March 2018 $SPOK
SBA Communications Corp Valuation – Initial Coverage $SBAC
Harris Corporation Valuation – February 2018 $HRS
Verizon Communications Inc Valuation – February 2018 $VZ
Mitel Networks Corp Valuation – Initial Coverage $TSE:MNW
ATN International Inc Valuation – Initial Coverage $ATNI
CenturyLink Inc Valuation – July 2017 $CTL
Telephone & Data Systems Inc Valuation – Initial Coverage $TDS
Lumos Networks Corp Valuation – Initial Coverage $LMOS
Lumentum Holdings Inc Valuation – Initial Coverage $LITE

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.

Spok Holdings Inc Valuation – March 2018 $SPOK

Company Profile (obtained from Marketwatch): Spok Holdings, Inc. engages in the provision of communication solutions. It offers call center operations, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions. The company was founded on November 16, 2004 and is headquartered in Springfield, VA.

SPOK Chart

SPOK data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPOK – 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 $317,291,300 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.89 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 -108.34% Fail
6. Moderate PEmg Ratio PEmg < 20 61.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.03 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.89 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.24
MG Growth Estimate -4.25%
MG Value $4.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $3.52
MG Value based on 0% Growth $2.06
Market Implied Growth Rate 26.51%
Current Price $14.93
% of Intrinsic Value 343.64%

Spok Holdings, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.62 in 2014 to an estimated $0.24 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 26.51% 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 Spok Holdings, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.5 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 61.52, which was above the industry average of 37.61. Finally, the company was trading above its Net Current Asset Value (NCAV) of $4.34.

Spok Holdings, 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) $4.34
Graham Number $0.00
PEmg 61.52
Current Ratio 2.89
PB Ratio 1.03
Current Dividend $0.50
Dividend Yield 3.35%
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 $146,860,000
Total Current Liabilities $50,894,000
Long-Term Debt $0
Total Assets $350,561,000
Intangible Assets $140,948,000
Total Liabilities $60,032,000
Shares Outstanding (Diluted Average) 19,985,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.76
Dec2017 -$0.76
Dec2016 $0.68
Dec2015 $3.74
Dec2014 $0.96
Dec2013 $1.25
Dec2012 $1.20
Dec2011 $3.72
Dec2010 $3.45
Dec2009 $2.90
Dec2008 -$5.83
Dec2007 -$0.19
Dec2006 $1.46
Dec2005 $0.47
Dec2004 $0.58
Dec2003 $0.65
Dec2002 $18.84
Dec2001 -$8.83
Dec2000 -$4.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.24
Dec2017 $0.89
Dec2016 $1.66
Dec2015 $2.16
Dec2014 $1.62
Dec2013 $2.13
Dec2012 $2.08
Dec2011 $1.95
Dec2010 $0.83
Dec2009 -$0.40
Dec2008 -$1.60
Dec2007 $0.54
Dec2006 $2.07
Dec2005 $2.36
Dec2004 $2.68
Dec2003 $2.93
Dec2002 $3.11

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stock Picks for the Enterprising Investor – July 2017
10 Low PE Stock Picks for the Enterprising Investor – April 2017
Best Stocks Below Their Graham Number – March 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017
10 Low PE Stock Picks for the Enterprising Investor – March 2017

Other ModernGraham posts about related companies

Harris Corporation Valuation – February 2018 $HRS
Verizon Communications Inc Valuation – February 2018 $VZ
Mitel Networks Corp Valuation – Initial Coverage $TSE:MNW
ATN International Inc Valuation – Initial Coverage $ATNI
CenturyLink Inc Valuation – July 2017 $CTL
Telephone & Data Systems Inc Valuation – Initial Coverage $TDS
Lumos Networks Corp Valuation – Initial Coverage $LMOS
Lumentum Holdings Inc Valuation – Initial Coverage $LITE
Windstream Holdings Inc Valuation – March 2017 $WIN
Sierra Wireless Inc Valuation – Initial Coverage $TSE:SW

Disclaimer:

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

SBA Communications Corp Valuation – Initial Coverage $SBAC

 

SBAC Chart

SBAC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SBAC – 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 $18,497,954,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.93 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 -159.15% Fail
6. Moderate PEmg Ratio PEmg < 20 357.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -7.51 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 0.93 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -479.59 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 $0.46
MG Growth Estimate 15.00%
MG Value $17.68
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $6.66
MG Value based on 0% Growth $3.90
Market Implied Growth Rate 174.50%
Current Price $164.21
% of Intrinsic Value 928.56%

SBA Communications 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, 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 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 $-0.75 in 2014 to an estimated $0.46 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 174.5% 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 SBA Communications Corporation 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 357.5, which was above the industry average of 37.61. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-81.24.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$81.24
Graham Number $0.00
PEmg 357.50
Current Ratio 0.93
PB Ratio -7.51
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 $259,533,000
Total Current Liabilities $278,905,000
Long-Term Debt $9,290,686,000
Total Assets $7,320,205,000
Intangible Assets $3,598,131,000
Total Liabilities $9,919,319,000
Shares Outstanding (Diluted Average) 118,907,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.91
Dec2017 $0.86
Dec2016 $0.61
Dec2015 -$1.37
Dec2014 -$0.19
Dec2013 -$0.44
Dec2012 -$1.51
Dec2011 -$1.14
Dec2010 -$1.68
Dec2009 -$1.20
Dec2008 -$0.61
Dec2007 -$0.74
Dec2006 -$1.36
Dec2005 -$1.28
Dec2004 -$2.52
Dec2003 -$3.36
Dec2002 -$5.29
Dec2001 -$2.99
Dec2000 -$0.70
Dec1999 -$1.77
Dec1998 -$2.64

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.46
Dec2017 $0.12
Dec2016 -$0.36
Dec2015 -$0.87
Dec2014 -$0.75
Dec2013 -$1.08
Dec2012 -$1.34
Dec2011 -$1.20
Dec2010 -$1.19
Dec2009 -$0.98
Dec2008 -$1.01
Dec2007 -$1.43
Dec2006 -$2.10
Dec2005 -$2.68
Dec2004 -$3.24
Dec2003 -$3.34
Dec2002 -$3.11

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Harris Corporation Valuation – February 2018 $HRS
Verizon Communications Inc Valuation – February 2018 $VZ
Mitel Networks Corp Valuation – Initial Coverage $TSE:MNW
ATN International Inc Valuation – Initial Coverage $ATNI
CenturyLink Inc Valuation – July 2017 $CTL
Telephone & Data Systems Inc Valuation – Initial Coverage $TDS
Lumos Networks Corp Valuation – Initial Coverage $LMOS
Lumentum Holdings Inc Valuation – Initial Coverage $LITE
Windstream Holdings Inc Valuation – March 2017 $WIN
Sierra Wireless Inc Valuation – Initial Coverage $TSE:SW

Disclaimer:

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

Harris Corporation Valuation – February 2018 $HRS

Company Profile (obtained from Marketwatch): Harris Corp. engages in the provision of technology-based solutions. It operates through the following business segments: Communication Systems, Space & Intelligence Systems, Electronic Systems and Critical Networks. The Communication System segment deals in integrated system solutions for U.S. and international defense and public safety networks including tactical ground and airborne radios, battlefield management software and night vision technology. The Space and Intelligence System segment deals in Complete Earth observation, environmental solutions, geospatial, space, protection and intelligence solutions from advanced sensors and payloads, as well as ground processing and information analytics. The Electronic System segment is the extensive portfolio of solutions in electronic warfare, avionics, wireless technology, C4I and undersea systems and The Critical Network segment manages services supporting air traffic management, energy and maritime communications, ground network operation, sustainment, high-value IT and engineering services. The company was founded in 1926 and is headquartered in Melbourne, FL.

HRS Chart

HRS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HRS – February 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 $18,880,411,077 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.22 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 38.32% Pass
6. Moderate PEmg Ratio PEmg < 20 36.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.42 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 1.22 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.67 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.33
MG Growth Estimate 7.61%
MG Value $102.66
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $62.74
MG Value based on 0% Growth $36.78
Market Implied Growth Rate 14.13%
Current Price $159.02
% of Intrinsic Value 154.90%

Harris Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.87 in 2014 to an estimated $4.33 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.13% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Harris Corporation revealed the company was trading above its Graham Number of $55.73. The company pays a dividend of $2.12 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 36.75, which was below the industry average of 37.96, 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 $-39.12.

Harris 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) -$39.12
Graham Number $55.73
PEmg 36.75
Current Ratio 1.22
PB Ratio 6.42
Current Dividend $2.12
Dividend Yield 1.33%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,132,000,000
Total Current Liabilities $1,741,000,000
Long-Term Debt $3,391,000,000
Total Assets $9,856,000,000
Intangible Assets $6,422,000,000
Total Liabilities $6,862,000,000
Shares Outstanding (Diluted Average) 120,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.64
Jun2017 $4.44
Jun2016 $2.59
Jun2015 $3.11
Jun2014 $4.95
Jun2013 $1.01
Jun2012 $0.26
Jun2011 $4.60
Jun2010 $4.28
Jun2009 $0.28
Jun2008 $3.26
Jun2007 $3.43
Jun2006 $1.71
Jun2005 $1.46
Jun2004 $0.97
Jun2003 $0.45
Jun2002 $0.62
Jun2001 $0.16
Jun2000 $0.13
Jun1999 $0.34
Jun1998 $0.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.33
Jun2017 $3.52
Jun2016 $2.83
Jun2015 $2.90
Jun2014 $2.87
Jun2013 $1.92
Jun2012 $2.42
Jun2011 $3.39
Jun2010 $2.72
Jun2009 $1.97
Jun2008 $2.60
Jun2007 $2.05
Jun2006 $1.25
Jun2005 $0.93
Jun2004 $0.60
Jun2003 $0.39
Jun2002 $0.37

Recommended Reading:

Other ModernGraham posts about the company

Harris Corporation Valuation – February 2016 $HRS
10 Best Stocks For Value Investors This Week – 9/26/15
Harris Corporation Analysis – September 2015 Update $HRS
Harris Corporation Analysis – June 2015 Update $HRS
18 Companies in the Spotlight This Week – 3/21/15

Other ModernGraham posts about related companies

Mitel Networks Corp Valuation – Initial Coverage $TSE:MNW
ATN International Inc Valuation – Initial Coverage $ATNI
CenturyLink Inc Valuation – July 2017 $CTL
Telephone & Data Systems Inc Valuation – Initial Coverage $TDS
Lumos Networks Corp Valuation – Initial Coverage $LMOS
Lumentum Holdings Inc Valuation – Initial Coverage $LITE
Windstream Holdings Inc Valuation – March 2017 $WIN
Sierra Wireless Inc Valuation – Initial Coverage $TSE:SW
Frontier Communications Corp Valuation – February 2017 $FTR
Spok Holdings Inc Valuation – Initial Coverage $SPOK

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