Occidental Petroleum Corp Valuation – March 2019 #OXY

Company Profile (excerpt from Reuters): Occidental Petroleum Corporation (Occidental), incorporated on April 9, 1986, is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. Occidental’s domestic upstream oil and gas operations are located in New Mexico and Texas. Its international operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of OXY – 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 $48,967,841,552 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -55.40% Fail
6. Moderate PEmg Ratio PEmg < 20 42.46 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.31 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.05 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.54
MG Growth Estimate 15.00%
MG Value $59.24
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $22.31
MG Value based on 0% Growth $13.08
Market Implied Growth Rate 16.98%
Current Price $65.33
% of Intrinsic Value 110.28%

Occidental Petroleum 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 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. 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 $-0.42 in 2015 to an estimated $1.54 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.98% 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 Occidental Petroleum Corporation revealed the company was trading above its Graham Number of $32.19. The company pays a dividend of $3.1 per share, for a yield of 4.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 42.46, which was below the industry average of 58.42, 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 $-16.66.

Occidental Petroleum 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) -$16.66
Graham Number $32.19
PEmg 42.46
Current Ratio 1.34
PB Ratio 2.31
Current Dividend $3.10
Dividend Yield 4.75%
Number of Consecutive Years of Dividend Growth 17

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 $9,932,000,000
Total Current Liabilities $7,412,000,000
Long-Term Debt $10,201,000,000
Total Assets $43,854,000,000
Intangible Assets $0
Total Liabilities $22,524,000,000
Shares Outstanding (Diluted Average) 755,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.63
Dec2018 $5.39
Dec2017 $1.70
Dec2016 -$0.75
Dec2015 -$10.23
Dec2014 $0.79
Dec2013 $7.32
Dec2012 $5.67
Dec2011 $8.32
Dec2010 $5.56
Dec2009 $3.58
Dec2008 $8.34
Dec2007 $6.44
Dec2006 $4.87
Dec2005 $6.48
Dec2004 $2.80
Dec2003 $1.98
Dec2002 $1.31
Dec2001 $1.55
Dec2000 $2.13
Dec1999 $0.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.54
Dec2018 $0.79
Dec2017 -$1.09
Dec2016 -$1.47
Dec2015 -$0.42
Dec2014 $4.83
Dec2013 $6.60
Dec2012 $6.25
Dec2011 $6.51
Dec2010 $5.66
Dec2009 $5.79
Dec2008 $6.52
Dec2007 $5.25
Dec2006 $4.26
Dec2005 $3.58
Dec2004 $2.07
Dec2003 $1.64

Recommended Reading:

Other ModernGraham posts about the company

Occidental Petroleum Corp Valuation – June 2018 $OXY
Most Overvalued Stocks of the S&P 500 – March 2017
Occidental Petroleum Corp Valuation – February 2017 $OXY
Occidental Petroleum Corp Valuation – August 2016 $OXY
Occidental Petroleum Corporation – 2015 Update $OXY

Other ModernGraham posts about related companies

Phillips 66 Valuation – March 2019 #PSX
Halliburton Co Valuation – March 2019 #HAL
Kinder Morgan Inc Valuation – February 2019 $KMI
National Oilwell Varco Inc Valuation – February 2019 $NOV
Diamondback Energy Inc Valuation – February 2019 $FANG
TechnipFMC PLC Valuation – February 2019 $FTI
Marathon Petroleum Corp Valuation – February 2019 $MPC
Baker Hughes, a GE Co Valuation – February 2019 $BHGE
EOG Resources Inc Valuation – February 2019 $EOG
ConocoPhillips Valuation – February 2019 $COP

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.

Crown Castle International Corp Valuation – January 2019 $CCI

Company Profile (excerpt from Reuters): Crown Castle International Corp., incorporated on May 27, 2014, is a real estate investment trust (REIT), which owns, operates and leases shared wireless infrastructure that is geographically dispersed throughout the United States and Puerto Rico. The Company’s segments include towers and small cells. As of December 31, 2016, the Company had approximately 40,000 towers and other structures, such as rooftops (collectively towers) and approximately 26,500 route miles of fiber (collectively small cells, and together with towers, wireless infrastructure). The towers segment provides access, including space or capacity to its towers, which are geographically dispersed throughout the United States. The towers segment also reflects certain network services relating to its towers, consisting of site development services and installation services. As of December 31, 2016, the small cells segment provided access, including space or capacity, to the Company’s approximately 17,000 route miles of fiber primarily supporting small cell networks. The small cells segment also offers fiber-based solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CCI – January 2019

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $43,904,860,878 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 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 -389.19% Fail
6. Moderate PEmg Ratio PEmg < 20 68.28 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.55 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 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -296.60 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 $1.53
MG Growth Estimate 15.00%
MG Value $59.08
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $22.25
MG Value based on 0% Growth $13.04
Market Implied Growth Rate 29.89%
Current Price $104.78
% of Intrinsic Value 177.34%

CROWN CASTLE IN/SH SH 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. 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 $0.54 in 2014 to an estimated $1.53 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 29.89% 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 below the price.

At the time of valuation, further research into CROWN CASTLE IN/SH SH revealed the company was trading above its Graham Number of $29.23. The company pays a dividend of $3.9 per share, for a yield of 3.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 68.28, which was below the industry average of 70.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-45.91.

CROWN CASTLE IN/SH SH 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) -$45.91
Graham Number $29.23
PEmg 68.28
Current Ratio 0.96
PB Ratio 3.55
Current Dividend $3.90
Dividend Yield 3.72%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,249,000,000
Total Current Liabilities $1,304,000,000
Long-Term Debt $16,313,000,000
Total Assets $32,644,000,000
Intangible Assets $15,694,000,000
Total Liabilities $20,349,000,000
Shares Outstanding (Diluted Average) 416,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.25
Dec2017 $1.01
Dec2016 $0.95
Dec2015 $4.42
Dec2014 $1.04
Dec2013 $0.26
Dec2012 $0.64
Dec2011 $0.52
Dec2010 -$1.16
Dec2009 -$0.47
Dec2008 -$0.25
Dec2007 -$0.87
Dec2006 -$0.30
Dec2005 -$2.06
Dec2004 $0.88
Dec2003 -$2.36
Dec2002 -$1.38
Dec2001 -$2.22
Dec2000 -$1.48
Dec1999 -$0.96
Dec1998 -$1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.53
Dec2017 $1.63
Dec2016 $1.78
Dec2015 $1.92
Dec2014 $0.54
Dec2013 $0.18
Dec2012 $0.04
Dec2011 -$0.32
Dec2010 -$0.70
Dec2009 -$0.57
Dec2008 -$0.59
Dec2007 -$0.82
Dec2006 -$0.88
Dec2005 -$1.26
Dec2004 -$1.01
Dec2003 -$1.86
Dec2002 -$1.54

Recommended Reading:

Other ModernGraham posts about the company

Crown Castle International Corp Valuation – March 2018 $CCI
Crown Castle International Corp Valuation – June 2016 $CCI
21 Companies in the Spotlight This Week – 5/9/15
Crown Castle International Corporation Annual Valuation – 2015 $CCI
16 Companies in the Spotlight This Week – 4/26/14

Other ModernGraham posts about related companies

Welltower Inc Valuation – January 2019 $WELL
Boston Properties Inc Valuation – January 2019 $BXP
AvalonBay Communities Inc Valuation – December 2018 $AVB
Weyerhaeuser Co Valuation – December 2018 $WY
Alexandria Real Estate Equities Inc Valuation – November 2018 $ARE
LaSalle Hotel Properties Valuation – September 2018 $LHO
Cousins Properties Inc Valuation – September 2018 $CUZ
Cominar Real Estate Investment Trust Valuation – September 2018 $TSE:CUF.UN
CareTrust REIT Inc Valuation – August 2018 $CTRE
Lamar Advertising Co Valuation – August 2018 $LAMR

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.

Occidental Petroleum Corp Valuation – June 2018 $OXY

Company Profile (excerpt from Reuters): Occidental Petroleum Corporation (Occidental), incorporated on April 9, 1986, is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. Occidental’s domestic upstream oil and gas operations are located in New Mexico and Texas. Its international operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE).

OXY Chart

OXY data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of OXY – 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 $65,167,048,809 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.26 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -85.11% Fail
6. Moderate PEmg Ratio PEmg < 20 -185.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.15 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 1.26 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.65 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.46
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$6.64
MG Value based on 0% Growth -$3.89
Market Implied Growth Rate -97.15%
Current Price $85.10
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.83 in 2014 to an estimated $-0.46 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Occidental Petroleum Corporation revealed the company was trading above its Graham Number of $31.59. The company pays a dividend of $3.06 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -185.81, which was below the industry average of 87.76, 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 $-17.2.

Occidental Petroleum 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) -$17.20
Graham Number $31.59
PEmg -185.81
Current Ratio 1.26
PB Ratio 3.15
Current Dividend $3.06
Dividend Yield 3.60%
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 3/1/2018
Total Current Assets $8,894,000,000
Total Current Liabilities $7,070,000,000
Long-Term Debt $10,309,000,000
Total Assets $42,808,000,000
Intangible Assets $0
Total Liabilities $22,086,000,000
Shares Outstanding (Diluted Average) 767,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.65
Dec2017 $1.70
Dec2016 -$0.75
Dec2015 -$10.23
Dec2014 $0.79
Dec2013 $7.32
Dec2012 $5.67
Dec2011 $8.32
Dec2010 $5.56
Dec2009 $3.58
Dec2008 $8.34
Dec2007 $6.44
Dec2006 $4.87
Dec2005 $6.48
Dec2004 $2.80
Dec2003 $1.98
Dec2002 $1.31
Dec2001 $1.55
Dec2000 $2.13
Dec1999 $0.62
Dec1998 $0.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.46
Dec2017 -$1.09
Dec2016 -$1.47
Dec2015 -$0.42
Dec2014 $4.83
Dec2013 $6.60
Dec2012 $6.25
Dec2011 $6.51
Dec2010 $5.66
Dec2009 $5.79
Dec2008 $6.52
Dec2007 $5.25
Dec2006 $4.26
Dec2005 $3.58
Dec2004 $2.07
Dec2003 $1.64
Dec2002 $1.39

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
Occidental Petroleum Corp Valuation – February 2017 $OXY
Occidental Petroleum Corp Valuation – August 2016 $OXY
Occidental Petroleum Corporation – 2015 Update $OXY
21 Companies in the Spotlight This Week – June 14, 2014

Other ModernGraham posts about related companies

Andeavor Valuation – May 2018 $ANDV
Halliburton Co Valuation – May 2018 $HAL
National Oilwell Varco Inc Valuation – May 2018 $NOV
Newfield Exploration Co Valuation – May 2018 $NFX
Kinder Morgan Inc Valuation – May 2018 $KMI
Range Resources Corp Valuation – May 2018 $RRC
Phillips 66 Valuation – April 2018 $PSX
Baker Hughes, a GE Co Valuation – April 2018 $BHGE
Marathon Petroleum Corp Valuation – April 2018 $MPC
TechnipFMC PLC Valuation – April 2018 $FTI

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.

Crown Castle International Corp Valuation – March 2018 $CCI

Company Profile (excerpt from Reuters): Crown Castle International Corp., incorporated on May 27, 2014, is a real estate investment trust (REIT), which owns, operates and leases shared wireless infrastructure that is geographically dispersed throughout the United States and Puerto Rico. The Company’s segments include towers and small cells. As of December 31, 2016, the Company had approximately 40,000 towers and other structures, such as rooftops (collectively towers) and approximately 26,500 route miles of fiber (collectively small cells, and together with towers, wireless infrastructure). The towers segment provides access, including space or capacity to its towers, which are geographically dispersed throughout the United States. The towers segment also reflects certain network services relating to its towers, consisting of site development services and installation services. As of December 31, 2016, the small cells segment provided access, including space or capacity, to the Company’s approximately 17,000 route miles of fiber primarily supporting small cell networks. The small cells segment also offers fiber-based solutions.

CCI Chart

CCI data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CCI – 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 $44,385,439,600 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.88 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 -369.37% Fail
6. Moderate PEmg Ratio PEmg < 20 74.64 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.61 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 0.88 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -101.35 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 $1.46
MG Growth Estimate 15.00%
MG Value $56.26
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $21.19
MG Value based on 0% Growth $12.42
Market Implied Growth Rate 33.07%
Current Price $109.08
% of Intrinsic Value 193.88%

Crown Castle International Corp. (REIT) 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. 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 $0.54 in 2014 to an estimated $1.46 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 33.07% 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 Crown Castle International Corp. (REIT) revealed the company was trading above its Graham Number of $26.53. The company pays a dividend of $3.9 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 74.64, which was above the industry average of 42.02. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-45.98.

Crown Castle International Corp. (REIT) 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) -$45.98
Graham Number $26.53
PEmg 74.64
Current Ratio 0.88
PB Ratio 3.61
Current Dividend $3.90
Dividend Yield 3.58%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $1,133,780,000
Total Current Liabilities $1,292,082,000
Long-Term Debt $16,044,369,000
Total Assets $32,229,570,000
Intangible Assets $15,983,227,000
Total Liabilities $19,890,488,000
Shares Outstanding (Diluted Average) 407,908,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.03
Dec2017 $1.01
Dec2016 $0.95
Dec2015 $4.42
Dec2014 $1.04
Dec2013 $0.26
Dec2012 $0.64
Dec2011 $0.52
Dec2010 -$1.16
Dec2009 -$0.47
Dec2008 -$0.25
Dec2007 -$0.87
Dec2006 -$0.30
Dec2005 -$2.06
Dec2004 $0.88
Dec2003 -$2.36
Dec2002 -$1.38
Dec2001 -$2.22
Dec2000 -$1.48
Dec1999 -$0.96
Dec1998 -$1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.46
Dec2017 $1.63
Dec2016 $1.78
Dec2015 $1.92
Dec2014 $0.54
Dec2013 $0.18
Dec2012 $0.04
Dec2011 -$0.32
Dec2010 -$0.70
Dec2009 -$0.57
Dec2008 -$0.59
Dec2007 -$0.82
Dec2006 -$0.88
Dec2005 -$1.26
Dec2004 -$1.01
Dec2003 -$1.86
Dec2002 -$1.54

Recommended Reading:

Other ModernGraham posts about the company

21 Companies in the Spotlight This Week – 5/9/15
Crown Castle International Corporation Annual Valuation – 2015 $CCI
16 Companies in the Spotlight This Week – 4/26/14
Crown Castle International (CCI) Annual Valuation – 2014

Other ModernGraham posts about related companies

GGP Inc Valuation – March 2018 $GGP
Starwood Property Trust Inc Valuation – March 2018 $STWD
Simon Property Group Inc Valuation – March 2018 $SPG
Welltower Inc Valuation – March 2018 $WELL
Boston Properties Inc Valuation – March 2018 $BXP
AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC

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.

Occidental Petroleum Corp Valuation – February 2017 $OXY

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 Occidental Petroleum Corp (OXY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Occidental Petroleum Corporation is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. OxyChem owns and operates manufacturing plants at approximately 20 domestic sites in Alabama, Georgia, Illinois, Kansas, Louisiana, Michigan, New Jersey, New York, Ohio, Pennsylvania, Tennessee and Texas, and at two international sites in Canada and Chile. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities.

OXY Chart

OXY 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 OXY – February 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $49,314,599,552 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.32 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -160.81% Fail
6. Moderate PEmg Ratio PEmg < 20 -42.25 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.31 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 1.32 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.75 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$1.54
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$22.27
MG Value based on 0% Growth -$13.06
Market Implied Growth Rate -25.37%
Current Price $64.89
% of Intrinsic Value N/A

Occidental Petroleum 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 high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. 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 $6.6 in 2013 to an estimated $-1.54 for 2017. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Occidental Petroleum Corporation revealed the company was trading above its Graham Number of $14.88. The company pays a dividend of $3.02 per share, for a yield of 4.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -42.25, which was below the industry average of 69.19, 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 $-17.26.

Occidental Petroleum 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) -$17.26
Graham Number $14.88
PEmg -42.25
Current Ratio 1.32
PB Ratio 2.31
Current Dividend $3.02
Dividend Yield 4.65%
Number of Consecutive Years of Dividend Growth 15

[/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
Total Current Assets $8,428,000,000
Total Current Liabilities $6,362,000,000
Long-Term Debt $9,819,000,000
Total Assets $43,109,000,000
Intangible Assets $0
Total Liabilities $21,612,000,000
Shares Outstanding (Diluted Average) 763,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.35
Dec2016 -$0.75
Dec2015 -$10.23
Dec2014 $0.79
Dec2013 $7.32
Dec2012 $5.67
Dec2011 $8.32
Dec2010 $5.56
Dec2009 $3.58
Dec2008 $8.34
Dec2007 $6.44
Dec2006 $4.87
Dec2005 $6.48
Dec2004 $2.80
Dec2003 $1.98
Dec2002 $1.31
Dec2001 $1.55
Dec2000 $2.13
Dec1999 $0.62
Dec1998 $0.50
Dec1997 -$0.72

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.54
Dec2016 -$1.47
Dec2015 -$0.42
Dec2014 $4.83
Dec2013 $6.60
Dec2012 $6.25
Dec2011 $6.51
Dec2010 $5.66
Dec2009 $5.79
Dec2008 $6.52
Dec2007 $5.25
Dec2006 $4.26
Dec2005 $3.58
Dec2004 $2.07
Dec2003 $1.64
Dec2002 $1.39
Dec2001 $1.23

Recommended Reading:

Other ModernGraham posts about the company

Occidental Petroleum Corporation – 2015 Update $OXY
21 Companies in the Spotlight This Week – June 14, 2014
Occidental Petroleum Corp Annual Valuation – 2014 $OXY
19 Companies in the Spotlight This Week – 3/15/14
Occidental Petroleum Corp (OXY) Quarterly Valuation

Other ModernGraham posts about related companies

Carrizo Oil & Gas Inc Valuation – Initial Coverage $CRZO
Denbury Resources Inc Valuation – February 2017 $DNR
California Resources Corp Valuation – Initial Coverage $CRC
Crew Energy Inc Valuation – Initial Coverage $TSE:CR
Exxon Mobil Corp Valuation – February 2017 $XOM
Superior Energy Services Inc Valuation – Initial Coverage $SPN
2017 Oil & Gas Industry Review
Spartan Energy Corp Valuation – Initial Coverage $TSE:SPE
Crescent Point Energy Corp Valuation – Initial Coverage $TSE:CPG
Tesoro Corporation Valuation – February 2017 $TSO

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.

Occidental Petroleum Corp Valuation – August 2016 $OXY

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

Company Profile (obtained from Google Finance): Occidental Petroleum Corporation is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. OxyChem owns and operates manufacturing plants at approximately 20 domestic sites in Alabama, Georgia, Illinois, Kansas, Louisiana, Michigan, New Jersey, New York, Ohio, Pennsylvania, Tennessee and Texas, and at two international sites in Canada and Chile. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities.

OXY Chart

OXY 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. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of OXY – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $59,134,928,626 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.70 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -153.32% Fail
6. Moderate PEmg Ratio PEmg < 20 -57.43 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.53 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 1.70 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.25 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

OXY value chart August 2016

EPSmg -$1.33
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$19.32
MG Value based on 0% Growth -$11.33
Market Implied Growth Rate -32.97%
Current Price $76.54
% of Intrinsic Value N/A

Occidental Petroleum 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 high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability 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 $6.25 in 2012 to an estimated $-1.33 for 2016. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Occidental Petroleum Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $3 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -57.43, which was below the industry average of 55.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.52.

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

Stage 3: Information for Further Research

OXY charts August 2016

Net Current Asset Value (NCAV) -$13.52
Graham Number $0.00
PEmg -57.43
Current Ratio 1.70
PB Ratio 2.53
Current Dividend $3.00
Dividend Yield 3.92%
Number of Consecutive Years of Dividend Growth 14

[/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 6/1/2016
Total Current Assets $8,972,000,000
Total Current Liabilities $5,267,000,000
Long-Term Debt $8,331,000,000
Total Assets $42,395,000,000
Intangible Assets $0
Total Liabilities $19,294,000,000
Shares Outstanding (Diluted Average) 763,600,000

Earnings Per Share History

Next Fiscal Year Estimate -$0.35
Dec2015 -$10.23
Dec2014 $0.79
Dec2013 $7.32
Dec2012 $5.67
Dec2011 $8.32
Dec2010 $5.56
Dec2009 $3.58
Dec2008 $8.34
Dec2007 $6.44
Dec2006 $4.87
Dec2005 $6.48
Dec2004 $2.80
Dec2003 $1.98
Dec2002 $1.31
Dec2001 $1.55
Dec2000 $2.13
Dec1999 $0.62
Dec1998 $0.50
Dec1997 -$0.72
Dec1996 $0.87

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate -$1.33
Dec2015 -$0.42
Dec2014 $4.83
Dec2013 $6.60
Dec2012 $6.25
Dec2011 $6.51
Dec2010 $5.66
Dec2009 $5.79
Dec2008 $6.52
Dec2007 $5.25
Dec2006 $4.26
Dec2005 $3.58
Dec2004 $2.07
Dec2003 $1.64
Dec2002 $1.39
Dec2001 $1.23
Dec2000 $0.94

Recommended Reading:

Other ModernGraham posts about the company

Occidental Petroleum Corporation – 2015 Update $OXY
21 Companies in the Spotlight This Week – June 14, 2014
Occidental Petroleum Corp Annual Valuation – 2014 $OXY
19 Companies in the Spotlight This Week – 3/15/14
Occidental Petroleum Corp (OXY) Quarterly Valuation

Other ModernGraham posts about related companies

Chevron Corp Valuation – August 2016 $CVX
Exxon Mobil Corporation Valuation – August 2016 $XOM
National-Oilwell Varco Inc Valuation – August 2016 $NOV
Newfield Exploration Co Valuation – August 2016 $NFX
EOG Resources Inc Valuation – July 2016 $EOG
Noble Corp PLC Valuation – July 2016 $NE
Baker Hughes Inc Valuation – July 2016 $BHI
Rowan Companies PLC Valuation – July 2016 $RDC
ConocoPhillips Valuation – July 2016 $COP
Devon Energy Corp Valuation – July 2016 $DVN

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.

Crown Castle International Corp Valuation – June 2016 $CCI

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

Company Profile (obtained from Google Finance): Crown Castle International Corp. is a real estate investment trust. The Company owns, operates, and leases shared wireless infrastructure, including towers and other structures, such as rooftops (towers) and small cell networks supported by fiber. The Company operates through U.S. operations segment. The Company also offers certain network services relating to its wireless infrastructure, consisting of site development services relating to existing or new tenant equipment installations on its wireless infrastructure, including site acquisition, architectural and engineering, or zoning and permitting (collectively, site development services), and tenant equipment installation or subsequent augmentations (collectively installation services).The Company’s business is providing access, including space or capacity to its wireless infrastructure in the United States. It also offers fiber solutions, including dark fiber and lit fiber.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of CCI – June 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $33,418,408,518 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.01 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 -737.74% Fail
6. Moderate PEmg Ratio PEmg < 20 32.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.64 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.01 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1,318.06 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

CCI value chart June 2016

EPSmg $3.02
MG Growth Estimate 15.00%
MG Value $116.42
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $43.85
MG Value based on 0% Growth $25.70
Market Implied Growth Rate 12.12%
Current Price $99.00
% of Intrinsic Value 85.03%

Crown Castle International Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, 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. 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 $0.04 in 2012 to an estimated $3.02 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 12.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

Crown Castle International Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

CCI charts June 2016

Net Current Asset Value (NCAV) -$41.04
Graham Number $47.24
PEmg 32.74
Current Ratio 1.01
PB Ratio 4.64
Current Dividend $3.41
Dividend Yield 3.44%
Number of Consecutive Years of Dividend Growth 3

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $820,882,000
Total Current Liabilities $811,946,000
Long-Term Debt $11,778,176,000
Total Assets $21,718,251,000
Intangible Assets $9,238,193,000
Total Liabilities $14,565,257,000
Shares Outstanding (Diluted Average) 334,929,000

Earnings Per Share History

Next Fiscal Year Estimate $4.68
Dec2015 $4.42
Dec2014 $1.04
Dec2013 $0.26
Dec2012 $0.64
Dec2011 $0.52
Dec2010 -$1.16
Dec2009 -$0.47
Dec2008 -$0.25
Dec2007 -$0.87
Dec2006 -$0.30
Dec2005 -$2.07
Dec2004 $0.89
Dec2003 -$2.09
Dec2002 -$1.16
Dec2001 -$2.08
Dec2000 -$1.48
Dec1999 -$0.96
Dec1998 -$1.02
Dec1997 -$2.27

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.02
Dec2015 $1.92
Dec2014 $0.54
Dec2013 $0.18
Dec2012 $0.04
Dec2011 -$0.32
Dec2010 -$0.70
Dec2009 -$0.58
Dec2008 -$0.59
Dec2007 -$0.80
Dec2006 -$0.83
Dec2005 -$1.16
Dec2004 -$0.87
Dec2003 -$1.68
Dec2002 -$1.43
Dec2001 -$1.57
Dec2000 -$1.26

Recommended Reading:

Other ModernGraham posts about the company

21 Companies in the Spotlight This Week – 5/9/15
Crown Castle International Corporation Annual Valuation – 2015 $CCI
16 Companies in the Spotlight This Week – 4/26/14
Crown Castle International (CCI) Annual Valuation – 2014

Other ModernGraham posts about related companies

General Growth Properties Inc Valuation – June 2016 $GGP
Boston Properties Inc Valuation – June 2016 $BXP
Simon Property Group Inc Valuation – June 2016 $SPG
AvalonBay Communities Inc Valuation – May 2016 $AVB
Weyerhaeuser Company Valuation – May 2016 $WY
Realty Income Corporation Valuation – May 2016 $O
Welltower Inc. Valuation – May 2016 $HCN
Starwood Property Trust Inc Stock Valuation – February 2016 $STWD
Kimco Realty Corp Stock Valuation – February 2016 $KIM
HCP Inc Valuation – January 2016 Update $HCP

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.

Occidental Petroleum Corporation – 2015 Update $OXY

300px-Occidental_Logo.svgBenjamin 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 5 Most Undervalued Companies for the Defensive Investor – May 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Occidental Petroleum Corporation (OXY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Occidental Petroleum Corporation (Occidental) is engaged in the oil and gas exploration and production. The Company, through its subsidiaries and affliates, operates in the United States, Middle East/North Africa and Latin America. Occidental operates through three segments. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGL) and natural gas. The chemical (OxyChem) segment manufactures and markets basic chemicals and vinyls. The midstream, marketing and other segment (midstream and marketing) gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity, and trades oil, NGLs, gas and other commodities.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $78.77
MG Value $0.00
MG Opinion Overvalued
Value Based on 3% Growth $45.95
Value Based on 0% Growth $26.93
Market Implied Growth Rate 8.18%
Net Current Asset Value (NCAV) -$11.42
PEmg 24.86
Current Ratio 1.51
PB Ratio 1.77

Balance Sheet – March 2015

Current Assets $10,434,000,000
Current Liabilities $6,915,000,000
Total Debt $6,139,000,000
Total Assets $53,389,000,000
Intangible Assets $0
Total Liabilities $19,225,000,000
Outstanding Shares 769,600,000

Earnings Per Share

2015 (estimate) $0.55
2014 $0.79
2013 $7.32
2012 $5.67
2011 $8.32
2010 $5.56
2009 $3.58
2008 $8.34
2007 $6.44
2006 $4.87
2005 $6.48

Earnings Per Share – ModernGraham

2015 (estimate) $3.17
2014 $4.83
2013 $6.60
2012 $6.25
2011 $6.51
2010 $5.66

Dividend History

Conclusion:

Occidental Petroleum is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, the insufficient earnings growth over the last ten years, and the high PEmg ratio.  The Enterprising Investor is concerned with the level of debt relative to the current assets, and the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $6.51 in 2011 to only an estimated $3.17 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 8.18% 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 well below the price.

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

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.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Crown Castle International Corporation Annual Valuation – 2015 $CCI

crown-castle-logoREITs often attract a great deal of investors because of their strong cash flows and dividends, and those investors often overlook other parts of the business, choosing to analyze the company under a different set of criteria than companies in other sectors.  This can create a problem in that it becomes difficult to compare a REIT to an industrial, which is fine if you use the typical top-down approach to stock selection; however, a top-down approach invites speculation in the fact that you are theorizing which sector will perform well going forward.  Benjamin Graham taught that we should avoid speculation as much as possible, which is why it is critical to develop a system for analyzing companies that will allow them to be compared across industries.  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 investment opportunity.  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 specific look at how Crown Castle International (CCI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Crown Castle International Corp. (CCIC) is a real estate investment trust (REIT) company. The Company owns, operates and leases shared wireless infrastructure, including towers and other structures, such as rooftops (towers), and to a lesser extent, distributed antenna systems (DAS), a type of small cell network (small cells), and interests in land under third party towers in various forms (third party land interests). Its core business is renting space or physical capacity (collectively, space) on its towers, DAS and, to a lesser extent, third party land interests (collectively, site rental business) through long-term contracts in various forms, including license, sublease and lease agreements (collectively, contracts). The Company owned, leased or managed approximately 39,600 towers in the United States, including Puerto Rico, and approximately 1,700 towers in Australia.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $82.27
MG Value $72.35
MG Opinion Overvalued
Value Based on 3% Growth $27.25
Value Based on 0% Growth $15.97
Market Implied Growth Rate 17.64%
Net Current Asset Value (NCAV) -$40.90
PEmg 43.78
Current Ratio 1.13
PB Ratio 4.20

Balance Sheet – December 2014

Current Assets $928,000,000
Current Liabilities $822,000,000
Total Debt $11,954,000,000
Total Assets $21,105,000,000
Intangible Assets $8,866,000,000
Total Liabilities $14,569,000,000
Outstanding Shares 333,500,000

Earnings Per Share

2015 (estimate) $4.29
2014 $1.04
2013 $0.26
2012 $0.64
2011 $0.52
2010 -$1.16
2009 -$0.47
2008 -$0.25
2007 -$0.87
2006 -$0.33
2005 -$2.03

Earnings Per Share – ModernGraham

2015 (estimate) $1.88
2014 $0.54
2013 $0.18
2012 $0.04
2011 -$0.32
2010 -$0.70

Dividend History

Conclusion:

Crown Castle International Corp is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, lack of earnings stability or growth over the last ten years, inconsistent dividend record, and the high PEmg and PB ratios.  The Enterprising Investor is concerned with the high level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued despite growing its EPSmg (normalized earnings) from a loss of $0.32 in 2011 to an estimated gain of $1.88 in 2015.  This level of growth does not support the market’s implied estimate of 17.64% annual earnings growth over the next 7-10 years, leading the ModernGraham valuation model to return an estimate of intrinsic value falling below the current price.  As a result, the company is considered to be overvalued at this time.

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

Disclaimer:  The author did not hold a position in Crown Castle International Corp (CCI) or any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Occidental Petroleum Corp Annual Valuation – 2014 $OXY

300px-Occidental_Logo.svgBenjamin 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 5 Undervalued Companies for the Defensive Investor Near 52 Week Lows.  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 specific look at how Occidental Petroleum (OXY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Occidental Petroleum Corporation (Occidental) conducts its operations through various subsidiaries and affiliates. The Company operates in three segments: oil and gas segment; chemical segment, and midstream, marketing and other segment. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The chemical segment (OxyChem) mainly manufactures and markets basic chemicals and vinyls. The midstream, marketing and other segment (midstream and marketing) gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity, and trades oil, NGLs, gas and other commodities. The segment also invests in entities that conduct similar activities. On December 31, 2012, it acquired Eagle Ford Shale.

OXY Chart

OXY data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $99.98
MG Value $94.98
MG Opinion Fairly Valued
Value Based on 3% Growth $97.27
Value Based on 0% Growth $57.02
Market Implied Growth Rate 3.20%
Net Current Asset Value (NCAV) -$19.57
PEmg 14.90
Current Ratio 1.33
PB Ratio 1.83

Balance Sheet – 3/31/2014

Current Assets $10,899,000,000
Current Liabilities $8,190,000,000
Total Debt $6,877,000,000
Total Assets $69,275,000,000
Intangible Assets $0
Total Liabilities $26,277,000,000
Outstanding Shares 785,610,000

Earnings Per Share

2014 (estimate) $6.44
2013 $7.34
2012 $5.71
2011 $8.16
2010 $5.61
2009 $3.59
2008 $8.33
2007 $6.05
2006 $5.15
2005 $6.45
2004 $3.25

Earnings Per Share – ModernGraham

2014 (estimate) $6.71
2013 $6.59
2012 $6.24
2011 $6.45
2010 $5.64
2009 $5.74

Dividend History

OXY Dividend Chart

OXY Dividend data by YCharts

Conclusion:

Occidental Petroleum Corp is no longer suitable for the Defensive Investor or the Enterprising Investor.  The company has shown a lack of sufficient earnings growth over the last ten years, which when combined with the low current ratio, disqualifies it from the Defensive Investor’s portfolio.  The Enterprising Investor also has concerns with the high level of debt relative to current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should seek other opportunities through a review of ModernGraham’s valuation of Chevron Corp (CVX) and ModernGraham’s valuation of Exxon Mobil (XOM).  From a valuation side of things, the company appears to be fairly valued after having grown its EPSmg (normalized earnings) from $5.64 in 2010 to an estimated $6.71 for 2014.  This demonstrated level of growth is enough to support the market’s implied estimate of 3.20% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

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

Be sure to review the previous ModernGraham Valuations of Occidental Petroleum (OXY)!

Disclaimer:  The author did not hold a position in Occidental Petroleum (OXY) or any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Back To Top