Chubb Ltd Valuation – March 2019 #CB

Company Profile (excerpt from Reuters): Chubb Limited, incorporated on July 18, 2008, is a holding company. The Company, through its subsidiaries, provides a range of insurance and reinsurance products and services to clients around the world. Its segments include North America Commercial property and casualty (P&C) Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance and Life Insurance. It offers commercial insurance products and service offerings, such as risk management programs, loss control, and engineering and complex claims management. It provides specialized insurance products to areas, such as aviation and energy. It also offers personal lines insurance coverage, including homeowners, automobile, valuables, umbrella liability and recreational marine products. In addition, it supplies personal accident, supplemental health and life insurance to individuals in select countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CB – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $62,335,221,108 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 25.14% Fail
5. Moderate PEmg Ratio PEmg < 20 14.98 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.25 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.08
MG Growth Estimate 0.73%
MG Value $90.36
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $131.60
MG Value based on 0% Growth $77.15
Market Implied Growth Rate 3.24%
Current Price $135.96
% of Intrinsic Value 150.47%

Chubb Ltd is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $8.66 in 2015 to an estimated $9.08 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.24% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Chubb Ltd revealed the company was trading below its Graham Number of $158.96. The company pays a dividend of $2.9 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.98, which was below the industry average of 26.11, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Chubb Ltd performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $158.96
PEmg 14.98
PB Ratio 1.25
Dividend Yield 2.13%
TTM Dividend $2.90
Number of Consecutive Years of Dividend Growth 3

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Long-Term Debt & Capital Lease Obligation $12,395,000,000
Total Assets $167,771,000,000
Intangible Assets $21,709,000,000
Total Liabilities $117,459,000,000
Shares Outstanding (Diluted Average) 463,196,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.25
Dec2018 $8.49
Dec2017 $8.19
Dec2016 $8.87
Dec2015 $8.62
Dec2014 $8.42
Dec2013 $10.92
Dec2012 $7.89
Dec2011 $4.52
Dec2010 $9.11
Dec2009 $7.55
Dec2008 $3.50
Dec2007 $7.66
Dec2006 $6.91
Dec2005 $3.31
Dec2004 $3.88
Dec2003 $5.25
Dec2002 $0.27
Dec2001 -$0.78
Dec2000 $2.31
Dec1999 $1.85

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.08
Dec2018 $8.50
Dec2017 $8.67
Dec2016 $8.92
Dec2015 $8.66
Dec2014 $8.51
Dec2013 $8.37
Dec2012 $6.90
Dec2011 $6.42
Dec2010 $7.23
Dec2009 $6.12
Dec2008 $5.29
Dec2007 $5.93
Dec2006 $4.68
Dec2005 $3.17
Dec2004 $2.80
Dec2003 $2.10

Recommended Reading:

Other ModernGraham posts about the company

Chubb Ltd Valuation – June 2018 $CB
Chubb Ltd Valuation – March 2017 $CB
21 Best Undervalued Stocks of the Week – 8/27/16
Chubb Limited Valuation – August 2016 $CB
Chubb Ltd Stock Valuation – February 2016 $CB

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Unum Group Valuation – February 2019 $UNM
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Disclaimer:

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

CBRE Group Inc Valuation – March 2019 #CBRE

Company Profile (excerpt from Reuters): CBRE Group, Inc., incorporated on February 20, 2001, is a holding company that conducts all of its operations through its subsidiaries. The Company operates as a commercial real estate services and investment company. The Company operates through the segments: The Americas; Europe, Middle East and Africa (EMEA); Asia Pacific; Global Investment Management, and Development Services. The Company provides services in the office, retail, industrial, multifamily and hotel sectors of commercial real estate.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CBRE – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $16,848,841,335 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.16 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 270.51% Pass
6. Moderate PEmg Ratio PEmg < 20 18.28 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.43 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 1.16 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.86 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 $2.74
MG Growth Estimate 15.00%
MG Value $105.64
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $39.79
MG Value based on 0% Growth $23.32
Market Implied Growth Rate 4.89%
Current Price $50.16
% of Intrinsic Value 47.48%

CBRE Group Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PB ratio. 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 $1.3 in 2015 to an estimated $2.74 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.89% 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 CBRE Group Inc revealed the company was trading above its Graham Number of $33.87. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 18.28, which was below the industry average of 21.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.94.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.94
Graham Number $33.87
PEmg 18.28
Current Ratio 1.16
PB Ratio 3.43
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 12/1/2018
Total Current Assets $6,754,210,000
Total Current Liabilities $5,803,380,000
Long-Term Debt $1,767,260,000
Total Assets $13,456,793,000
Intangible Assets $5,093,617,000
Total Liabilities $8,446,891,000
Shares Outstanding (Diluted Average) 342,689,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.52
Dec2018 $3.10
Dec2017 $2.05
Dec2016 $1.69
Dec2015 $1.63
Dec2014 $1.45
Dec2013 $0.95
Dec2012 $0.97
Dec2011 $0.74
Dec2010 $0.63
Dec2009 $0.12
Dec2008 -$4.81
Dec2007 $1.66
Dec2006 $1.35
Dec2005 $0.95
Dec2004 $0.30
Dec2003 -$0.23
Dec2002 $0.15
Dec2001 $0.73

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.74
Dec2018 $2.23
Dec2017 $1.72
Dec2016 $1.48
Dec2015 $1.30
Dec2014 $1.07
Dec2013 $0.82
Dec2012 $0.34
Dec2011 -$0.09
Dec2010 -$0.41
Dec2009 -$0.67
Dec2008 -$0.74
Dec2007 $1.13
Dec2006 $0.74
Dec2005 $0.42
Dec2004 $0.17
Dec2003 $0.11

Recommended Reading:

Other ModernGraham posts about the company

CBRE Group Inc Valuation – June 2018 $CBRE

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Disclaimer:

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

CBS Corp Valuation – February 2019 $CBS

Company Profile (excerpt from Reuters): CBS Corporation, incorporated on November 10, 1986, is a mass media company. The Company operates through four segment: Entertainment, Cable Networks, Publishing and Local Media. The Entertainment segment comprises the CBS Television Network; CBS Television Studios; CBS Studios International and CBS Television Distribution; CBS Interactive; CBS Films; and the Company’s digital streaming services, CBS All Access and CBSN. The Cable Networks segment comprises Showtime Networks, which operates its subscription program services, Showtime, The Movie Channel, and Flix. The Publishing segment comprises Simon & Schuster, which publishes and distributes consumer books under imprints, such as Simon & Schuster, Pocket Books, Scribner and Gallery Books. The Local Media segment comprises CBS TV Stations, and CBS Local Digital Media. Its businesses span the media and entertainment industries, including the CBS TV Network, cable networks, content production and distribution, television stations, Internet-based businesses, and consumer publishing. It focuses on exhibiting its content on multiple digital platforms, including digital streaming services, as well as third-party live television streaming offerings.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CBS – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,347,191,065 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.51 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 168.39% Pass
6. Moderate PEmg Ratio PEmg < 20 15.10 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.39 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 1.51 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.62 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.25
MG Growth Estimate -0.52%
MG Value $24.24
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $47.08
MG Value based on 0% Growth $27.60
Market Implied Growth Rate 3.30%
Current Price $49.02
% of Intrinsic Value 202.26%

CBS Corporation Common Stock 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 PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.36 in 2014 to an estimated $3.25 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.3% 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 CBS Corporation Common Stock revealed the company was trading above its Graham Number of $24.44. The company pays a dividend of $0.72 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 15.1, which was below the industry average of 31.72, 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 $-33.02.

CBS Corporation Common Stock 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) -$33.02
Graham Number $24.44
PEmg 15.10
Current Ratio 1.51
PB Ratio 7.39
Current Dividend $0.72
Dividend Yield 1.47%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $6,040,000,000
Total Current Liabilities $3,993,000,000
Long-Term Debt $9,465,000,000
Total Assets $21,068,000,000
Intangible Assets $7,571,000,000
Total Liabilities $18,554,000,000
Shares Outstanding (Diluted Average) 379,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.14
Dec2017 $0.88
Dec2016 $2.81
Dec2015 $2.89
Dec2014 $5.27
Dec2013 $3.01
Dec2012 $2.39
Dec2011 $1.92
Dec2010 $1.04
Dec2009 $0.33
Dec2008 -$17.43
Dec2007 $1.73
Dec2006 $2.15
Dec2005 -$8.98
Dec2004 -$20.37
Dec2003 $1.61
Dec2002 $0.82
Dec2001 -$0.26
Dec2000 -$1.34
Dec1999 $0.90
Dec1998 -$0.42

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.25
Dec2017 $2.52
Dec2016 $3.32
Dec2015 $3.42
Dec2014 $3.36
Dec2013 $2.19
Dec2012 $0.40
Dec2011 -$1.23
Dec2010 -$2.68
Dec2009 -$4.50
Dec2008 -$7.47
Dec2007 -$3.25
Dec2006 -$5.48
Dec2005 -$8.01
Dec2004 -$6.32
Dec2003 $0.58
Dec2002 $0.03

Recommended Reading:

Other ModernGraham posts about the company

CBS Corporation Valuation – April 2018 $CBS
7 Best Undervalued Stocks of the Week – 9/3/16
CBS Corporation Valuation – August 2016 $CBS
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CBS Corporation Valuation – May 2016 $CBS

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Disclaimer:

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

Chubb Ltd Valuation – June 2018 $CB

Company Profile (excerpt from Reuters): Chubb Limited, incorporated on July 18, 2008, is a holding company. The Company, through its subsidiaries, provides a range of insurance and reinsurance products and services to clients around the world. Its segments include North America Commercial property and casualty (P&C) Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance and Life Insurance. It offers commercial insurance products and service offerings, such as risk management programs, loss control, and engineering and complex claims management. It provides specialized insurance products to areas, such as aviation and energy. It also offers personal lines insurance coverage, including homeowners, automobile, valuables, umbrella liability and recreational marine products. In addition, it supplies personal accident, supplemental health and life insurance to individuals in select countries.

CB Chart

CB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $60,917,599,377 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 28.23% Fail
5. Moderate PEmg Ratio PEmg < 20 14.47 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.20 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.04
MG Growth Estimate 0.93%
MG Value $93.65
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $131.01
MG Value based on 0% Growth $76.80
Market Implied Growth Rate 2.99%
Current Price $130.78
% of Intrinsic Value 139.65%

Chubb Ltd is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $8.51 in 2014 to an estimated $9.04 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.99% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Chubb Ltd revealed the company was trading below its Graham Number of $158.34. The company pays a dividend of $2.82 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.47, which was below the industry average of 30.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Chubb Ltd performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $158.34
PEmg 14.47
PB Ratio 1.20
Dividend Yield 2.16%
TTM Dividend $2.82
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Long-Term Debt & Capital Lease Obligation $12,786,000,000
Total Assets $168,781,000,000
Intangible Assets $22,444,000,000
Total Liabilities $117,494,000,000
Shares Outstanding (Diluted Average) 469,474,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.10
Dec2017 $8.19
Dec2016 $8.87
Dec2015 $8.62
Dec2014 $8.42
Dec2013 $10.92
Dec2012 $7.89
Dec2011 $4.52
Dec2010 $9.11
Dec2009 $7.55
Dec2008 $3.50
Dec2007 $7.66
Dec2006 $6.91
Dec2005 $3.31
Dec2004 $3.88
Dec2003 $5.25
Dec2002 $0.27
Dec2001 -$0.78
Dec2000 $2.31
Dec1999 $1.85
Sep1998 $2.96

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.04
Dec2017 $8.67
Dec2016 $8.92
Dec2015 $8.66
Dec2014 $8.51
Dec2013 $8.37
Dec2012 $6.90
Dec2011 $6.42
Dec2010 $7.23
Dec2009 $6.12
Dec2008 $5.29
Dec2007 $5.93
Dec2006 $4.68
Dec2005 $3.17
Dec2004 $2.80
Dec2003 $2.10
Dec2002 $0.79

Recommended Reading:

Other ModernGraham posts about the company

Chubb Ltd Valuation – March 2017 $CB
21 Best Undervalued Stocks of the Week – 8/27/16
Chubb Limited Valuation – August 2016 $CB
Chubb Ltd Stock Valuation – February 2016 $CB
Dividend Growth Stocks for Intelligent Investors – February 2016

Other ModernGraham posts about related companies

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Arthur J Gallagher & Co Valuation – April 2018 $AJG
Allstate Corp Valuation – April 2018 $ALL
Hartford Financial Services Group Inc Valuation – April 2018 $HIG
Unum Group Valuation – April 2018 $UNM
Brighthouse Financial Inc Valuation – Initial Coverage $BHF
XL Group Ltd Valuation – April 2018 $XL
Aetna Inc Valuation – April 2018 $AET

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.

CBRE Group Inc Valuation – June 2018 $CBRE

Company Profile (excerpt from Reuters): CBRE Group, Inc., incorporated on February 20, 2001, is a holding company that conducts all of its operations through its subsidiaries. The Company operates as a commercial real estate services and investment company. The Company operates through the segments: The Americas; Europe, Middle East and Africa (EMEA); Asia Pacific; Global Investment Management, and Development Services. The Company provides services in the office, retail, industrial, multifamily and hotel sectors of commercial real estate.

CBRE Chart

CBRE data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CBRE – 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 $15,651,811,146 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.18 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 346.98% Pass
6. Moderate PEmg Ratio PEmg < 20 21.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.57 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 1.18 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.99 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 $2.17
MG Growth Estimate 15.00%
MG Value $83.67
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $31.51
MG Value based on 0% Growth $18.47
Market Implied Growth Rate 6.35%
Current Price $46.07
% of Intrinsic Value 55.06%

CBRE Group Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 Undervalued after growing its EPSmg (normalized earnings) from $1.07 in 2014 to an estimated $2.17 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.35% 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 above the price.

At the time of valuation, further research into CBRE Group Inc revealed the company was trading above its Graham Number of $27.99. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 21.2, which was below the industry average of 22.96, 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 $-5.06.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.06
Graham Number $27.99
PEmg 21.20
Current Ratio 1.18
PB Ratio 3.57
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $5,754,300,000
Total Current Liabilities $4,869,655,000
Long-Term Debt $1,758,188,000
Total Assets $11,907,442,000
Intangible Assets $4,677,134,000
Total Liabilities $7,488,768,000
Shares Outstanding (Diluted Average) 342,590,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.94
Dec2017 $2.03
Dec2016 $1.69
Dec2015 $1.63
Dec2014 $1.45
Dec2013 $0.95
Dec2012 $0.97
Dec2011 $0.74
Dec2010 $0.63
Dec2009 $0.12
Dec2008 -$4.81
Dec2007 $1.66
Dec2006 $1.35
Dec2005 $0.95
Dec2004 $0.30
Dec2003 -$0.23
Dec2002 $0.15
Dec2001 $0.73

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.17
Dec2017 $1.71
Dec2016 $1.48
Dec2015 $1.30
Dec2014 $1.07
Dec2013 $0.82
Dec2012 $0.34
Dec2011 -$0.09
Dec2010 -$0.41
Dec2009 -$0.67
Dec2008 -$0.74
Dec2007 $1.13
Dec2006 $0.74
Dec2005 $0.42
Dec2004 $0.17
Dec2003 $0.11
Dec2002 $0.25

Recommended Reading:

Other ModernGraham posts about the company

CBRE Group Inc Valuation – July 2016 $CBG
58 Companies in the Spotlight This Week – 1/31/15
CBRE Group Inc. Annual Valuation – 2015 $CBG
14 Companies in the Spotlight This Week – 1/11/14
ModernGraham Valuation: CBRE Group Inc. (CBG)

Other ModernGraham posts about related companies

Franklin Resources Inc Valuation – May 2018 $BEN
S&P Global Inc Valuation – May 2018 $SPGI
Equifax Inc Valuation – May 2018 $EFX
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Discover Financial Services Valuation – May 2018 $DFS
Affiliated Managers Group Inc Valuation – May 2018 $AMG
The Western Union Co Valuation – April 2018 $WU
Northern Trust Corp Valuation – April 2018 $NTRS
Nasdaq Inc Valuation – April 2018 $NDAQ
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Disclaimer:

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

CBS Corporation Valuation – April 2018 $CBS

Company Profile (excerpt from Reuters): CBS Corporation, incorporated on November 10, 1986, is a mass media company. The Company operates through four segment: Entertainment, Cable Networks, Publishing and Local Media. The Entertainment segment comprises the CBS Television Network; CBS Television Studios; CBS Studios International and CBS Television Distribution; CBS Interactive; CBS Films; and the Company’s digital streaming services, CBS All Access and CBSN. The Cable Networks segment comprises Showtime Networks, which operates its subscription program services, Showtime, The Movie Channel, and Flix. The Publishing segment comprises Simon & Schuster, which publishes and distributes consumer books under imprints, such as Simon & Schuster, Pocket Books, Scribner and Gallery Books. The Local Media segment comprises CBS TV Stations, and CBS Local Digital Media. Its businesses span the media and entertainment industries, including the CBS TV Network, cable networks, content production and distribution, television stations, Internet-based businesses, and consumer publishing. It focuses on exhibiting its content on multiple digital platforms, including digital streaming services, as well as third-party live television streaming offerings.

CBS Chart

CBS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CBS – 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 $19,385,377,917 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.58 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 167.17% Pass
6. Moderate PEmg Ratio PEmg < 20 15.74 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.24 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 1.58 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.11 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.23
MG Growth Estimate -0.58%
MG Value $23.75
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $46.88
MG Value based on 0% Growth $27.48
Market Implied Growth Rate 3.62%
Current Price $50.90
% of Intrinsic Value 214.29%

CBS 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 PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.36 in 2014 to an estimated $3.23 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.62% 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 CBS Corporation revealed the company was trading above its Graham Number of $24.34. The company pays a dividend of $0.72 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 15.74, which was below the industry average of 32.74, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-31.64.

CBS 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) -$31.64
Graham Number $24.34
PEmg 15.74
Current Ratio 1.58
PB Ratio 10.24
Current Dividend $0.72
Dividend Yield 1.41%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $6,273,000,000
Total Current Liabilities $3,972,000,000
Long-Term Debt $9,464,000,000
Total Assets $20,843,000,000
Intangible Assets $7,557,000,000
Total Liabilities $18,865,000,000
Shares Outstanding (Diluted Average) 398,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.10
Dec2017 $0.88
Dec2016 $2.81
Dec2015 $2.89
Dec2014 $5.27
Dec2013 $3.01
Dec2012 $2.39
Dec2011 $1.92
Dec2010 $1.04
Dec2009 $0.33
Dec2008 -$17.43
Dec2007 $1.73
Dec2006 $2.15
Dec2005 -$8.98
Dec2004 -$20.37
Dec2003 $1.61
Dec2002 $0.82
Dec2001 -$0.26
Dec2000 -$1.34
Dec1999 $0.90
Dec1998 -$0.42

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.23
Dec2017 $2.52
Dec2016 $3.32
Dec2015 $3.42
Dec2014 $3.36
Dec2013 $2.19
Dec2012 $0.40
Dec2011 -$1.23
Dec2010 -$2.68
Dec2009 -$4.50
Dec2008 -$7.47
Dec2007 -$3.25
Dec2006 -$5.48
Dec2005 -$8.01
Dec2004 -$6.32
Dec2003 $0.58
Dec2002 $0.03

Recommended Reading:

Other ModernGraham posts about the company

7 Best Undervalued Stocks of the Week – 9/3/16
CBS Corporation Valuation – August 2016 $CBS
6 Best Stocks For Value Investors This Week – 5/14/16
CBS Corporation Valuation – May 2016 $CBS
5 Undervalued Companies for Value Investors with a High Beta – January 2016

Other ModernGraham posts about related companies

Discovery Inc Valuation – April 2018 $DISCA
Time Warner Inc Valuation – March 2018 $TWX
Viacom Inc Valuation – March 2018 $VIAB
Twenty-First Century Fox Inc Valuation – March 2018 $FOXA
Walt Disney Co Valuation – February 2018 $DIS
Live Nation Entertainment Inc Valuation – Initial Coverage $LYV
Walt Disney Co Valuation – March 2017 $DIS
Tegna Inc Valuation – February 2017 $TGNA
E.W. Scripps Co Valuation – Initial Coverage $SSP
News Corp Valuation – February 2017 $NWSA

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.

Cboe Global Markets Inc Valuation – Initial Coverage $CBOE

Company Profile (excerpt from Reuters): Cboe Global Markets, Inc., formerly CBOE Holdings, Inc., incorporated on August 15, 2006, is a holding company. The Company provides trading and investment solutions to investors around the world. It offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, United States and European equities, exchange-traded products (ETPs), global foreign exchange (FX) and multi-asset volatility products based on the Cboe Volatility Index (VIX Index).

CBOE Chart

CBOE data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CBOE – 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 $12,612,814,613 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.30 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 176.61% Pass
6. Moderate PEmg Ratio PEmg < 20 33.34 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.05 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 1.30 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.29 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 $3.36
MG Growth Estimate 11.57%
MG Value $106.24
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $48.67
MG Value based on 0% Growth $28.53
Market Implied Growth Rate 12.42%
Current Price $111.91
% of Intrinsic Value 105.34%

Cboe Global Markets 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. 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 $1.89 in 2014 to an estimated $3.36 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 12.42% 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 Cboe Global Markets Inc revealed the company was trading above its Graham Number of $51.85. The company pays a dividend of $1.04 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 33.34, which was above the industry average of 25.5. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-15.28.

Cboe Global Markets 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) -$15.28
Graham Number $51.85
PEmg 33.34
Current Ratio 1.30
PB Ratio 4.05
Current Dividend $1.04
Dividend Yield 0.93%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $434,700,000
Total Current Liabilities $334,000,000
Long-Term Debt $1,237,900,000
Total Assets $5,265,700,000
Intangible Assets $4,650,600,000
Total Liabilities $2,155,100,000
Shares Outstanding (Diluted Average) 112,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.33
Dec2017 $3.69
Dec2016 $2.27
Dec2015 $2.46
Dec2014 $2.21
Dec2013 $1.99
Dec2012 $1.78
Dec2011 $1.52
Dec2010 $1.03
Dec2009 $1.17
Dec2008 $1.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.36
Dec2017 $2.75
Dec2016 $2.24
Dec2015 $2.15
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.44
Dec2011 $1.18
Dec2010 $0.90
Dec2009 $0.72
Dec2008 $0.41

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

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H&R Block Inc Valuation – March 2018 $HRB
Morgan Stanley Valuation – March 2018 $MS
BlackRock Inc Valuation – March 2018 $BLK
Ameriprise Financial Inc Valuation – March 2018 $AMP
Navient Corp Valuation – March 2018 $NAVI
Invesco Ltd Valuation – March 2018 $IVZ

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.

Texas Capital Banchares Inc Valuation – Initial Coverage $TCBI

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 Texas Capital Bancshares Inc (TCBI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Texas Capital Bancshares, Inc. is a bank holding and a financial holding company. The Company is the parent of Texas Capital Bank, National Association (the Bank). It offers a range of loan, deposit account and other financial products and services to its customers. It offers a range of products and services for its business customers, including commercial loans for general corporate purposes, including financing for working capital, internal growth, acquisitions and financing for business insurance premiums; medium- and long-term tax-exempt loans for municipalities and other governmental and tax-exempt entities; wealth management and trust services, and letters of credit. It also provides banking services for its individual customers, including personal wealth management and trust services; certificates of deposit; interest-bearing and non-interest-bearing checking accounts; traditional money market and savings accounts; loans, both secured and unsecured, and Internet banking.

TCBI Chart

TCBI data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TCBI – March 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,981,969,488 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 304.13% Pass
5. Moderate PEmg Ratio PEmg < 20 24.78 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.86 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $3.23
MG Growth Estimate 6.32%
MG Value $68.27
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $46.84
MG Value based on 0% Growth $27.46
Market Implied Growth Rate 8.14%
Current Price $80.05
% of Intrinsic Value 117.25%

Texas Capital Bancshares 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 ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.27 in 2013 to an estimated $3.23 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.14% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Texas Capital Bancshares Inc revealed the company was trading above its Graham Number of $56.38. The company pays a dividend of $0.81 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 24.78, which was above the industry average of 20.84.

Texas Capital Bancshares Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Graham Number $56.38
PEmg 24.78
PB Ratio 1.86
Dividend Yield 1.01%
TTM Dividend $0.81
Number of Consecutive Years of Dividend Growth 1

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Long-Term Debt & Capital Lease Obligation $2,394,450,000
Total Assets $21,697,134,000
Intangible Assets $48,048,000
Total Liabilities $19,687,577,000
Shares Outstanding (Diluted Average) 46,766,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.76
Dec2016 $3.11
Dec2015 $2.91
Dec2014 $2.88
Dec2013 $2.72
Dec2012 $3.00
Dec2011 $1.98
Dec2010 $1.00
Dec2009 $0.55
Dec2008 $0.87
Dec2007 $1.10
Dec2006 $1.09
Dec2005 $1.02
Dec2004 $0.77
Dec2003 $0.60
Dec2002 $0.32
Dec2001 $0.30
Dec2000 -$1.89
Dec1999 -$1.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.23
Dec2016 $2.95
Dec2015 $2.81
Dec2014 $2.62
Dec2013 $2.27
Dec2012 $1.86
Dec2011 $1.23
Dec2010 $0.87
Dec2009 $0.85
Dec2008 $0.99
Dec2007 $1.00
Dec2006 $0.89
Dec2005 $0.73
Dec2004 $0.39
Dec2003 $0.01
Dec2002 -$0.36
Dec2001 -$0.65

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

TCF Financial Corp Valuation – Initial Coverage $TCB
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Customers Bancorp Inc Valuation – Initial Coverage $CUBI
Comerica Inc Valuation – March 2017 $CMA
Sterling Bancorp Valuation – Initial Coverage $STL
S&T Bancorp Inc Valuation – Initial Coverage $STBA
Central Pacific Financial Corp Valuation – Initial Coverage $CPF
Synovus Financial Corp Valuation – Initial Coverage $SNV
U.S. Bancorp Valuation – February 2017 $USB

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.

TCF Financial Corp Valuation – Initial Coverage $TCB

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 TCF Financial Corp (TCB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TCF Financial Corporation (TCF) is a bank holding company. The Company’s principal subsidiary is TCF National Bank (TCF Bank). The Company operates in three segments: Consumer Banking, Wholesale Banking and Enterprise Services. Consumer Banking comprises all of the Company’s consumer-facing businesses. The Consumer Banking segment includes retail banking, consumer real estate and auto finance. Wholesale Banking comprises commercial real estate and business lending, leasing and equipment finance and inventory finance. TCF’s consumer banking strategy is primarily to generate deposits to use for funding high credit quality secured loans and leases. Enterprise Services comprises corporate treasury, corporate functions and the Holding Company. As of December 31, 2016, the Company’s total securities available for sale were $1.4 billion. As of December 31, 2016, the Company’s total loans were $17.8 billion. As of December 31, 2016, the Company’s total deposits were $17.2 billion.

TCB Chart

TCB data by YCharts

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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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TCB – March 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,746,821,864 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 27.76% Fail
5. Moderate PEmg Ratio PEmg < 20 14.76 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.10 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.08
MG Growth Estimate 15.00%
MG Value $41.61
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $15.67
MG Value based on 0% Growth $9.19
Market Implied Growth Rate 3.13%
Current Price $15.95
% of Intrinsic Value 38.34%

TCF Financial Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.23 in 2013 to an estimated $1.08 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.13% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into TCF Financial Corporation revealed the company was trading below its Graham Number of $18.02. The company pays a dividend of $0.3 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 14.76, which was below the industry average of 21.43, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

TCF Financial Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $18.02
PEmg 14.76
PB Ratio 1.10
Dividend Yield 1.88%
TTM Dividend $0.30
Number of Consecutive Years of Dividend Growth 3

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ModernGraham tagged articles Morningstar
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Long-Term Debt & Capital Lease Obligation $1,073,181,000
Total Assets $21,441,326,000
Intangible Assets $227,348,000
Total Liabilities $19,013,843,000
Shares Outstanding (Diluted Average) 167,807,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.14
Dec2016 $1.15
Dec2015 $1.07
Dec2014 $0.94
Dec2013 $0.82
Dec2012 -$1.37
Dec2011 $0.71
Dec2010 $1.08
Dec2009 $0.54
Dec2008 $1.01
Dec2007 $2.12
Dec2006 $1.90
Dec2005 $2.00
Dec2004 $1.86
Dec2003 $1.53
Dec2002 $1.58
Dec2001 $1.35
Dec2000 $1.18
Dec1999 $1.00
Dec1998 $0.88
Dec1997 $0.85

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.08
Dec2016 $0.87
Dec2015 $0.64
Dec2014 $0.42
Dec2013 $0.23
Dec2012 $0.09
Dec2011 $0.91
Dec2010 $1.12
Dec2009 $1.26
Dec2008 $1.67
Dec2007 $1.96
Dec2006 $1.85
Dec2005 $1.77
Dec2004 $1.60
Dec2003 $1.42
Dec2002 $1.31
Dec2001 $1.14

Recommended Reading:

Other ModernGraham posts about the company

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

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Disclaimer:

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

Chubb Ltd Valuation – March 2017 $CB

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

Company Profile (obtained from Google Finance): Chubb Limited (Chubb), formerly ACE Limited, is a holding company. The Company, through its subsidiaries, provides a range of insurance and reinsurance products to insureds across the world. The Company’s segments include North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance and Life Insurance. It provides traditional and specialty property and casualty (P&C) coverage for industrial, commercial and mid-market companies with claims and risk engineering capabilities to serve companies of various sizes. Its commercial P&C business is focused on various corporate customers that are served by retail brokers, middle market and small commercial companies served by retail independent agents and brokers, and specialty excess and surplus lines distributed through wholesale brokers. On the consumer insurance side, it offers a range of products for individual consumers and their families.

CB Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CB – March 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $65,482,678,553 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 36.06% Pass
5. Moderate PEmg Ratio PEmg < 20 15.15 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.37 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $9.25
MG Growth Estimate 1.59%
MG Value $108.10
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $134.17
MG Value based on 0% Growth $78.65
Market Implied Growth Rate 3.32%
Current Price $140.15
% of Intrinsic Value 129.65%

Chubb Ltd qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $8.37 in 2013 to an estimated $9.25 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.32% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Chubb Ltd revealed the company was trading below its Graham Number of $152.22. The company pays a dividend of $2.74 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 15.15, which was below the industry average of 18.78, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Chubb Ltd performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $152.22
PEmg 15.15
PB Ratio 1.37
Dividend Yield 1.96%
TTM Dividend $2.74
Number of Consecutive Years of Dividend Growth 2

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Long-Term Debt & Capital Lease Obligation $12,610,000,000
Total Assets $159,786,000,000
Intangible Assets $22,095,000,000
Total Liabilities $111,511,000,000
Shares Outstanding (Diluted Average) 471,613,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.94
Dec2016 $8.87
Dec2015 $8.62
Dec2014 $8.42
Dec2013 $10.92
Dec2012 $7.89
Dec2011 $4.52
Dec2010 $9.11
Dec2009 $7.55
Dec2008 $3.50
Dec2007 $7.66
Dec2006 $6.91
Dec2005 $3.31
Dec2004 $3.88
Dec2003 $5.25
Dec2002 $0.27
Dec2001 -$0.78
Dec2000 $2.31
Dec1999 $1.85
Sep1998 $2.96
Sep1997 $2.69

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.25
Dec2016 $8.92
Dec2015 $8.66
Dec2014 $8.51
Dec2013 $8.37
Dec2012 $6.90
Dec2011 $6.42
Dec2010 $7.23
Dec2009 $6.12
Dec2008 $5.29
Dec2007 $5.93
Dec2006 $4.68
Dec2005 $3.17
Dec2004 $2.80
Dec2003 $2.10
Dec2002 $0.79
Dec2001 $1.30

Recommended Reading:

Other ModernGraham posts about the company

Chubb Ltd Stock Valuation – February 2016 $CB
Dividend Growth Stocks for Intelligent Investors – February 2016
Dividend Growth Stocks for the Intelligent Investor – November 2015
Dividend Growth Stocks for the Intelligent Investor – October 2015
The Best Companies of the Insurance Industry – October 2015

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Stewart Information Services Corp Valuation – Initial Coverage $STC
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Anthem Inc Valuation – January 2017 $ANTM
American Financial Group Inc Valuation – January 2017 $AFG
Selective Insurance Group Valuation – Initial Coverage $SIGI
Berkshire Hathaway Inc Valuation – January 2017 $BRK.B
Infinity Property and Casualty Corp Valuation – Initial Coverage $IPCC
Hartford Financial Services Group Inc Valuation – December 2016 $HIG

Disclaimer:

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

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