Comcast Corp Valuation – January 2019 $CMCSA

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMCSA – 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 EnterpriseMarket Cap > $2Bil$162,098,868,009Pass
 2. Sufficiently Strong Financial ConditionCurrent Ratio > 21.18Fail
 3. Earnings StabilityPositive EPS for 10 years prior Pass
 4. Dividend RecordDividend Payments for 10 years prior Pass
 5. Earnings GrowthIncrease of 33% in EPS in past 10 years using 3 year averages at beginning and end347.90%Pass
 6. Moderate PEmg RatioPEmg < 2012.76Pass
 7. Moderate Price to AssetsPB Ratio < 2.5 OR PB*PEmg < 502.27Pass
     
     
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.  
 1. Sufficiently Strong Financial ConditionCurrent Ratio > 1.51.18Fail
 2. Sufficiently Strong Financial ConditionDebt to NCA < 1.119.48Fail
 3. Earnings StabilityPositive EPS for 5 years prior Pass
 4. Dividend RecordCurrently Pays Dividend Pass
 5. Earnings GrowthEPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg$2.79
MG Growth Estimate15.00%
MG Value$107.49
OpinionUndervalued
MG GradeB
MG Value based on 3% Growth$40.48
MG Value based on 0% Growth$23.73
Market Implied Growth Rate2.13%
Current Price$35.63
% of Intrinsic Value33.15%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.25 in 2014 to an estimated $2.79 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.13% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Comcast Corporation revealed the company was trading above its Graham Number of $29.05. The company pays a dividend of $0.63 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 12.76, which was below the industry average of 27.83, 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 $-22.75.

Comcast Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV)-$22.75
Graham Number$29.05
PEmg12.76
Current Ratio1.18
PB Ratio2.27
Current Dividend$0.63
Dividend Yield1.77%
Number of Consecutive Years of Dividend Growth10

Useful Links:

ModernGraham tagged articlesMorningstar
Google FinanceMSN Money
Yahoo FinanceSeeking Alpha
GuruFocusSEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information9/1/2018
Total Current Assets$23,206,000,000
Total Current Liabilities$19,627,000,000
Long-Term Debt$69,711,000,000
Total Assets$200,635,000,000
Intangible Assets$122,094,000,000
Total Liabilities$128,290,000,000
Shares Outstanding (Diluted Average)4,619,000,000

Earnings Per Share History

EPS History 
Next Fiscal Year Estimate$2.54
Dec2017$4.75
Dec2016$1.78
Dec2015$1.62
Dec2014$1.60
Dec2013$1.28
Dec2012$1.14
Dec2011$0.75
Dec2010$0.65
Dec2009$0.63
Dec2008$0.43
Dec2007$0.42
Dec2006$0.40
Dec2005$0.09
Dec2004$0.15
Dec2003$0.48
Dec2002-$0.06
Dec2001$0.21
Dec2000$0.71
Dec1999$0.44
Dec1998$0.40

Earnings Per Share – ModernGraham History

EPSmg History 
Next Fiscal Year Estimate$2.79
Dec2017$2.68
Dec2016$1.59
Dec2015$1.42
Dec2014$1.25
Dec2013$1.01
Dec2012$0.82
Dec2011$0.63
Dec2010$0.55
Dec2009$0.47
Dec2008$0.36
Dec2007$0.31
Dec2006$0.25
Dec2005$0.17
Dec2004$0.24
Dec2003$0.31
Dec2002$0.26

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Investor – June 2018
10 Low PE Stock Picks for the Defensive Investor – March 2018
5 Great Stocks This Week – 3/19/18
Comcast Corporation Valuation – March 2018 $CMCSA
Comcast Corporation Valuation – June 2016 $CMCSA

Other ModernGraham posts about related companies

Viacom Inc Valuation – January 2019 $VIAB
Twenty-First Century Fox Inc Valuation – January 2019 $FOX
Walt Disney Co Valuation – November 2018 $DIS
Tegna Inc Valuation – August 2018 $TGNA
E.W. Scripps Co Valuation – August 2018 $SSP
Cinemark Holdings Inc Valuation – August 2018 $CNK
Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B
AMC Networks Inc Valuation – July 2018 $AMCX
International Speedway Corp Valuation – July 2018 $ISCA
Cineplex Inc Valuation – July 2018 $TSE-CGX

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.

Comcast Corporation Valuation – March 2018 $CMCSA

Company Profile (obtained from Marketwatch): Comcast Corp. is a media, entertainment, and communications company, which engages in the provision of video, Internet, and phone services. It operates through the following segments: Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks. The Cable Communications segment provides services to business customers and sell advertising. The Cable Networks segment consists of national cable networks, regional sports, news networks, international cable networks, and cable television studio production operations. The Broadcast Television segment includes NBC and Telemundo broadcast networks. The Filmed Entertainment segment involves in the management of Universal Pictures and DreamWorks Animation. The Theme Parks segment comprises of Universal theme parks in Orlando, Florida, and Hollywood, California and Universal Studios theme park in Osaka, Japan. The company was founded by Ralph J. Roberts in 1963 and is headquartered in Philadelphia, PA.

CMCSA Chart

CMCSA data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMCSA – 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 $169,199,412,411 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.74 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 329.14% Pass
6. Moderate PEmg Ratio PEmg < 20 13.67 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.51 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.74 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.80 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.67
MG Growth Estimate 15.00%
MG Value $102.62
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $38.65
MG Value based on 0% Growth $22.66
Market Implied Growth Rate 2.58%
Current Price $36.43
% of Intrinsic Value 35.50%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.25 in 2014 to an estimated $2.67 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.58% 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 Comcast Corporation revealed the company was trading above its Graham Number of $26.79. The company pays a dividend of $0.63 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 13.67, which was below the industry average of 35.9, 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 $-21.64.

Comcast Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.64
Graham Number $26.79
PEmg 13.67
Current Ratio 0.74
PB Ratio 2.51
Current Dividend $0.63
Dividend Yield 1.73%
Number of Consecutive Years of Dividend Growth 10

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 $16,060,000,000
Total Current Liabilities $21,561,000,000
Long-Term Debt $59,422,000,000
Total Assets $186,949,000,000
Intangible Assets $114,923,000,000
Total Liabilities $118,343,000,000
Shares Outstanding (Diluted Average) 4,726,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.16
Dec2017 $4.75
Dec2016 $1.78
Dec2015 $1.62
Dec2014 $1.60
Dec2013 $1.28
Dec2012 $1.14
Dec2011 $0.75
Dec2010 $0.65
Dec2009 $0.63
Dec2008 $0.43
Dec2007 $0.42
Dec2006 $0.40
Dec2005 $0.09
Dec2004 $0.15
Dec2003 $0.48
Dec2002 -$0.06
Dec2001 $0.21
Dec2000 $0.71
Dec1999 $0.44
Dec1998 $0.40

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.67
Dec2017 $2.68
Dec2016 $1.59
Dec2015 $1.42
Dec2014 $1.25
Dec2013 $1.01
Dec2012 $0.82
Dec2011 $0.63
Dec2010 $0.55
Dec2009 $0.47
Dec2008 $0.36
Dec2007 $0.31
Dec2006 $0.25
Dec2005 $0.17
Dec2004 $0.24
Dec2003 $0.31
Dec2002 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Comcast Corporation Valuation – June 2016 $CMCSA
58 Companies in the Spotlight This Week – 1/31/15
Comcast Corporation Annual Valuation – 2015 $CMCSA
14 Companies in the Spotlight This Week – 1/18/14
ModernGraham Valuation: Comcast Corporation (CMCSA)

Other ModernGraham posts about related companies

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
Cinemark Holdings Inc Valuation – Initial Coverage $CNK
International Speedway Corp Valuation – Initial Coverage $ISCA
Corus Entertainment Inc Valuation – Initial Coverage $TSE:CJR.B

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.

Comcast Corporation Valuation – June 2016 $CMCSA

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

Company Profile (obtained from Google Finance): Comcast Corporation is a media and technology company. The Company’s primary businesses include Comcast Cable and NBCUniversal. Its Comcast Cable business operates in Cable Communications segment. Its NBCUniversal business consists of four segments, which include Cable Networks, Broadcast Television, Filmed Entertainment and Theme Parks. Its Cable Communications consists of the operations of Comcast Cable, which provides video, Internet and voice services to residential customers under the XFINITY brand. Its Cable Networks consists of national cable networks, regional sports and news networks, international cable networks and cable television studio production operations. Its Broadcast Television consists of the NBC and Telemundo broadcast networks. Its Filmed Entertainment consists of the operations of Universal Pictures. The Company’s Theme Parks consists in Universal theme parks in Orlando, Florida and Hollywood, California.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CMCSA – 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 $149,848,763,738 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 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 235.25% Pass
6. Moderate PEmg Ratio PEmg < 20 19.85 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.92 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -13.20 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

CMCSA value chart June 2016

EPSmg $3.15
MG Growth Estimate 13.73%
MG Value $113.17
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $45.64
MG Value based on 0% Growth $26.75
Market Implied Growth Rate 5.67%
Current Price $62.46
% of Intrinsic Value 55.19%

Comcast 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, poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.64 in 2012 to an estimated $3.15 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.67% 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.

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

Stage 3: Information for Further Research

CMCSA charts June 2016

Net Current Asset Value (NCAV) -$41.75
Graham Number $41.05
PEmg 19.85
Current Ratio 0.80
PB Ratio 2.92
Current Dividend $1.03
Dividend Yield 1.64%
Number of Consecutive Years of Dividend Growth 9

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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 3/1/2016
Total Current Assets $15,180,000,000
Total Current Liabilities $19,084,000,000
Long-Term Debt $51,515,000,000
Total Assets $170,599,000,000
Intangible Assets $109,654,000,000
Total Liabilities $117,957,000,000
Shares Outstanding (Diluted Average) 2,462,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.45
Dec2015 $3.24
Dec2014 $3.20
Dec2013 $2.56
Dec2012 $2.28
Dec2011 $1.50
Dec2010 $1.29
Dec2009 $1.26
Dec2008 $0.86
Dec2007 $0.83
Dec2006 $0.79
Dec2005 $0.28
Dec2004 $0.29
Dec2003 $0.96
Dec2002 -$0.17
Dec2001 $0.42
Dec2000 $1.42
Dec1999 $0.88
Dec1998 $1.62
Dec1997 -$0.25
Dec1996 -$0.07

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.15
Dec2015 $2.85
Dec2014 $2.49
Dec2013 $2.02
Dec2012 $1.64
Dec2011 $1.27
Dec2010 $1.10
Dec2009 $0.94
Dec2008 $0.72
Dec2007 $0.65
Dec2006 $0.51
Dec2005 $0.37
Dec2004 $0.47
Dec2003 $0.61
Dec2002 $0.57
Dec2001 $0.89
Dec2000 $0.99

Recommended Reading:

Other ModernGraham posts about the company

58 Companies in the Spotlight This Week – 1/31/15
Comcast Corporation Annual Valuation – 2015 $CMCSA
14 Companies in the Spotlight This Week – 1/18/14
ModernGraham Valuation: Comcast Corporation (CMCSA)

Other ModernGraham posts about related companies

Viacom Inc Valuation – June 2016 $VIAB
CBS Corporation Valuation – May 2016 $CBS
Graham Holdings Company Valuation – May 2016 $GHC
Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA
Scripps Networks Interactive Inc Valuation – February 2016 Update $SNI
Walt Disney Co Valuation – December 2015 Update $DIS
Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA
Scripps Networks Interactive Inc Valuation – February 2016 Update $SNI
Walt Disney Co Valuation – December 2015 Update $DIS
Wal-Mart Stores Inc. Valuation – November 2015 Update $WMT

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.

Comcast Corporation Annual Valuation – 2015 $CMCSA

220px-Comcast_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 – December 2014.  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 Comcast Corporation (CMCSA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Comcast Corporation is a media and technology company with two primary businesses, Comcast Cable and NBCUniversal. The Company’s segments include Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks. Cable communications consists of the operations of Comcast Cable, which is a provider of video, Internet and voice services (cable services) to residential customers under the XFINITY brand, and it also provides similar services to businesses and sells advertising. Cable networks consists of its national cable networks, its regional sports and news networks, its international cable networks, and its cable television production operations. Broadcast television consists of the NBC and Telemundo broadcast networks. Filmed entertainment consists of the studio operations of Universal Pictures, which produces, acquires, markets and distributes filmed entertainment. Theme parks consist of its Universal theme parks in Orlando and Hollywood.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  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 – 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 – PASS
  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 $56.31
MG Value $92.71
MG Opinion Undervalued
Value Based on 3% Growth $34.92
Value Based on 0% Growth $20.47
Market Implied Growth Rate 7.44%
NCAV -$35.17
PEmg 23.38
Current Ratio 0.82
PB Ratio 2.76

Balance Sheet – September 2014

Current Assets $13,936,000,000
Current Liabilities $17,084,000,000
Total Debt $44,827,000,000
Total Assets $159,237,000,000
Intangible Assets $103,776,000,000
Total Liabilities $105,939,000,000
Outstanding Shares 2,616,000,000

Earnings Per Share

2014 (estimate) $2.95
2013 $2.56
2012 $2.28
2011 $1.50
2010 $1.29
2009 $1.26
2008 $0.86
2007 $0.83
2006 $0.79
2005 $0.19
2004 $0.29

Earnings Per Share – ModernGraham

2014 (estimate) $2.41
2013 $2.02
2012 $1.64
2011 $1.27
2010 $1.10
2009 $0.93

Dividend History

Conclusion:

Comcast Corporation is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, short dividend history, and the high PEmg and PB ratios.  The Enterprising Investor is concerned with the level of debt relative to the current assets.  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 undervalued after growing its EPSmg (normalized earnings) from $1.10 in 2010 to an estimated $2.41 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 7.44% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of Comcast Corporation (CMCSA) for greater perspective!

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 Comcast Corporation (CMCSA)?  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 Comcast Corporation (CMCSA) 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.

ModernGraham Valuation: Comcast Corporation (CMCSA)

moneyCompany Profile (obtained from Google Finance): Comcast Corporation (Comcast) is a provider of entertainment, information and communications products and services. The Company operates in five segments: Cable Communications provides video, high-speed Internet and voice services (cable services) to residential and business customers; Cable Networks consists primarily of its national cable television networks, its regional sports and news networks, its international cable networks, its cable television production studio, and its related digital media properties; Broadcast Television consists primarily of its NBC and Telemundo broadcast networks, its NBC and Telemundo owned local television stations, its broadcast television production operations, and its related digital media properties; Filmed Entertainment consists of the operations of Universal Pictures., and Theme Parks consists primarily of its Universal theme parks in Orlando and Hollywood. Effective March 19, 2013, it acquired a 49% interest in NBCUniversal Media LLC.

Defensive and Enterprising Investor Tests (What is the significance of these tests, and what is PEmg ratio?):

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  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 – 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 – PASS
  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 (Explanation of the ModernGraham Valuation Model)

Key Data:

MG Value $76.38
MG Opinion Undervalued
Value Based on 3% Growth $28.77
Value Based on 0% Growth $16.86
Market Implied Growth Rate 9.24%
NCAV -$35.74
PEmg 26.99
Current Ratio 0.72
PB Ratio 2.82

Balance Sheet – 9/30/2013 

Current Assets $13,407,000,000
Current Liabilities $18,666,000,000
Total Debt $44,188,000,000
Total Assets $156,595,000,000
Intangible Assets $103,777,000,000
Total Liabilities $106,877,000,000
Outstanding Shares 2,615,430,000

Earnings Per Share

2013 (estimate) $2.46
2012 $2.28
2011 $1.50
2010 $1.29
2009 $1.26
2008 $0.86
2007 $0.83
2006 $0.70
2005 $0.28
2004 $0.29
2003 -$0.07
2002 -$0.28

Earnings Per Share – ModernGraham 

2013 (estimate) $1.98
2012 $1.64
2011 $1.27
2010 $1.10
2009 $0.93
2008 $0.70

Conclusion:

Comcast Corporation appears to present a very good value opportunity, but may present too much risk for investors seeking to follow Benjamin Graham’s value investing strategies.  The company is not suitable for either the Defensive Investor or the Enterprising Investor.  For the Defensive Investor, the company’s current ratio is too low, the company does not have a long enough recent history of paying dividends, and the company is trading at high PEmg and PB ratios.  For the Enterprising Investor, the company holds too much debt relative to its current assets.  As a result, the company presents a little more risk than we like to see, and investors may wish to seek other opportunities, perhaps beginning with a review of ModernGraham’s analysis of Verizon Communications (VZ).  As for the valuation, the company has grown EPSmg (normalized earnings) from $0.70 in 2008 to an estimated $1.98 for 2013.  This is a solid level of growth that outpaces the market’s implied estimate of 9.24%, and the company would therefore seem to be undervalued.

What do you think?  Do you agree that Comcast Corporation undervalued?  What would be your assessment?  Is the company not suitable for Defensive Investors or Enterprising Investors?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Comcast Corporation (CMCSA) at the time of publication and had no intention of changing that position within the next 72 hours.

Photo Credit:  Andrew Magill

News Corp Valuation – March 2019 #NWSA

Company Profile (excerpt from Reuters): News Corporation, incorporated on December 11, 2012, is a global diversified media and information services company focused on creating and distributing content to consumers and businesses throughout the world. The Company’s operations are organized into five segments: News and Information Services; Book Publishing; Digital Real Estate Services; Cable Network Programming, and Other. The Company comprises businesses across a range of media, including news and information services, book publishing, digital real estate services, cable network programming in Australia and pay-television distribution in Australia, that are distributed under brands, including The Wall Street Journal, Dow Jones, The Australian, Herald Sun, The Sun, The Times, HarperCollins Publishers, FOX SPORTS Australia, realestate.com.au, realtor.com and Foxtel, among others. The Company also owns a stake in Foxtel, a pay-television provider in Australia, which is accounted for as an equity investment. The Company operates primarily in the United States, Australia and the United Kingdom, and its content is distributed and consumed across the world. The Company delivers its content to consumers across numerous distribution platforms consisting not only of traditional print and television, but also through an array of digital platforms, including Websites, applications for mobile devices and tablets, social media and e-book devices.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NWSA – 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 $7,577,227,483 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.19 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 46.47% Pass
6. Moderate PEmg Ratio PEmg < 20 -15.96 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.73 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 1.19 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.31 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 -$0.81
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$11.76
MG Value based on 0% Growth -$6.90
Market Implied Growth Rate -12.23%
Current Price $12.95
% of Intrinsic Value N/A

News Corp Class A does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.2 in 2015 to an estimated $-0.81 for 2019. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into News Corp Class A revealed the company was trading above its Graham Number of $11.04. The company pays a dividend of $0.2 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was -15.96, which was below the industry average of 35.38, 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 $-2.32.

News Corp Class A 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) -$2.32
Graham Number $11.04
PEmg -15.96
Current Ratio 1.19
PB Ratio 0.73
Current Dividend $0.20
Dividend Yield 1.54%
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 $4,429,000,000
Total Current Liabilities $3,712,000,000
Long-Term Debt $936,000,000
Total Assets $16,227,000,000
Intangible Assets $7,796,000,000
Total Liabilities $5,793,000,000
Shares Outstanding (Diluted Average) 587,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.34
Jun2018 -$2.60
Jun2017 -$1.27
Jun2016 $0.30
Jun2015 -$0.26
Jun2014 $0.41
Jun2013 $0.87
Jun2012 -$3.58
Jun2011 $1.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.81
Jun2018 -$1.15
Jun2017 -$0.28
Jun2016 -$0.01
Jun2015 -$0.20
Jun2014 -$0.19
Jun2013 -$0.43
Jun2012 -$0.88
Jun2011 $0.39

Recommended Reading:

Other ModernGraham posts about the company

News Corp Valuation – February 2017 $NWSA
5 Speculative and Overvalued Companies to Avoid – November 2015
News Corporation Valuation – November 2015 Update $NWSA
27 Companies in the Spotlight This Week – 11/8/14
News Corp Annual Valuation – 2014 $NWSA

Other ModernGraham posts about related companies

CBS Corp Valuation – February 2019 $CBS
Discovery Inc Valuation – February 2019 $DISCA
Comcast Corp Valuation – January 2019 $CMCSA
Viacom Inc Valuation – January 2019 $VIAB
Twenty-First Century Fox Inc Valuation – January 2019 $FOX
Walt Disney Co Valuation – November 2018 $DIS
Tegna Inc Valuation – August 2018 $TGNA
E.W. Scripps Co Valuation – August 2018 $SSP
Cinemark Holdings Inc Valuation – August 2018 $CNK
Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B

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.

Netflix Inc Valuation – March 2019 #NFLX

Company Profile (excerpt from Reuters): Netflix, Inc., incorporated on August 29, 1997, is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NFLX – 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 $156,739,041,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.49 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 616.45% Pass
6. Moderate PEmg Ratio PEmg < 20 159.11 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 30.93 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 1.49 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.23 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 $2.26
MG Growth Estimate 15.00%
MG Value $86.91
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $32.73
MG Value based on 0% Growth $19.19
Market Implied Growth Rate 75.31%
Current Price $359.17
% of Intrinsic Value 413.28%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.36 in 2015 to an estimated $2.26 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 75.31% 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 Netflix, Inc. revealed the company was trading above its Graham Number of $31.39. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 159.11, which was above the industry average of 35.38. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.48.

Netflix, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.48
Graham Number $31.39
PEmg 159.11
Current Ratio 1.49
PB Ratio 30.93
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 $9,694,135,000
Total Current Liabilities $6,487,320,000
Long-Term Debt $10,360,058,000
Total Assets $25,974,400,000
Intangible Assets $0
Total Liabilities $20,735,635,000
Shares Outstanding (Diluted Average) 451,127,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.65
Dec2018 $2.68
Dec2017 $1.25
Dec2016 $0.43
Dec2015 $0.28
Dec2014 $0.62
Dec2013 $0.26
Dec2012 $0.04
Dec2011 $0.59
Dec2010 $0.42
Dec2009 $0.28
Dec2008 $0.19
Dec2007 $0.14
Dec2006 $0.10
Dec2005 $0.09
Dec2004 $0.05
Dec2003 $0.01
Dec2002 -$0.05
Dec2001 -$0.77
Dec2000 -$1.47

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.26
Dec2018 $1.39
Dec2017 $0.69
Dec2016 $0.38
Dec2015 $0.36
Dec2014 $0.39
Dec2013 $0.29
Dec2012 $0.31
Dec2011 $0.40
Dec2010 $0.28
Dec2009 $0.19
Dec2008 $0.14
Dec2007 $0.10
Dec2006 $0.06
Dec2005 -$0.01
Dec2004 -$0.19
Dec2003 -$0.36

Recommended Reading:

Other ModernGraham posts about the company

Netflix Inc Valuation – June 2018 $NFLX
Netflix Inc Valuation – February 2017 $NFLX
5 Speculative and Overvalued Companies to Avoid – November 2015
Netflix Inc Valuation – November 2015 Update $NFLX
5 Speculative and Overvalued Companies to Avoid – November 2014

Other ModernGraham posts about related companies

CBS Corp Valuation – February 2019 $CBS
Discovery Inc Valuation – February 2019 $DISCA
Comcast Corp Valuation – January 2019 $CMCSA
Viacom Inc Valuation – January 2019 $VIAB
Twenty-First Century Fox Inc Valuation – January 2019 $FOX
Walt Disney Co Valuation – November 2018 $DIS
Tegna Inc Valuation – August 2018 $TGNA
E.W. Scripps Co Valuation – August 2018 $SSP
Cinemark Holdings Inc Valuation – August 2018 $CNK
Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B

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.

10 Undervalued Companies for the Defensive Investor – March 2019

There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I’ve selected ten undervalued companies reviewed by ModernGraham. Each company has been determined to be suitable for Defensive Investor according to the ModernGraham approach. Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.

Principal Financial Group Inc (PFG)

Principal Financial Group Inc qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.9 in 2014 to an estimated $5.72 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.29% annual earnings loss 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 Principal Financial Group Inc revealed the company was trading below its Graham Number of $76.24. The company pays a dividend of $1.87 per share, for a yield of 4.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 7.92, which was below the industry average of 30.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Principal Financial Group Inc fares extremely well in the ModernGraham grading system, scoring an A.  (See the full valuation)  

Gilead Sciences, Inc. (GILD)

Gilead Sciences, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.61 in 2014 to an estimated $6.87 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.69% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price. At the time of valuation, further research into Gilead Sciences, Inc. revealed the company was trading above its Graham Number of $44.37. The company pays a dividend of $2.08 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 9.88, which was below the industry average of 35.4, 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 $-4.88. Gilead Sciences, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)  

Molson Coors Brewing Co Class B (TAP)

Molson Coors Brewing Co Class B qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.97 in 2014 to an estimated $5.89 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.12% 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 Molson Coors Brewing Co Class B revealed the company was trading below its Graham Number of $86.77. The company pays a dividend of $1.64 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.75, which was below the industry average of 19.84, 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 $-62.64. Molson Coors Brewing Co Class B fares extremely well in the ModernGraham grading system, scoring an A.  (See the full valuation)  

Nucor Corporation (NUE)

Nucor Corporation qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.32 in 2015 to an estimated $4.86 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.04% 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 Nucor Corporation revealed the company was trading above its Graham Number of $60.93. The company pays a dividend of $1.54 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.58, which was below the industry average of 18.08, 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 $2.96. Nucor Corporation performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)  

Celanese Corporation (CE)

Celanese Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.61 in 2015 to an estimated $7.8 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.04% 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 Celanese Corporation revealed the company was trading above its Graham Number of $69.96. The company pays a dividend of $2.08 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 12.58, which was below the industry average of 22.8, 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 $-23.16. Celanese Corporation performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)  

D. R. Horton Inc (DHI)

D. R. Horton Inc qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.73 in 2015 to an estimated $3.22 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.97% 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 D. R. Horton Inc revealed the company was trading below its Graham Number of $44.1. The company pays a dividend of $0.5 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 12.44, which was below the industry average of 20.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $18.75. D. R. Horton Inc fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)  

Comcast Corporation (CMCSA)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.25 in 2014 to an estimated $2.79 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.13% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Comcast Corporation revealed the company was trading above its Graham Number of $29.05. The company pays a dividend of $0.63 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 12.76, which was below the industry average of 27.83, 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 $-22.75.

Comcast Corporation performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)  

Applied Materials, Inc. (AMAT)

Applied Materials, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.76 in 2015 to an estimated $2.68 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.18% 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 Applied Materials, Inc. revealed the company was trading above its Graham Number of $20.6. The company pays a dividend of $0.6 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 14.85, which was below the industry average of 29.46, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.19. Applied Materials, Inc. performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

AT&T Inc. (T)

AT&T Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $3.06 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.53% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price. At the time of valuation, further research into AT&T Inc. revealed the company was trading below its Graham Number of $38.89. The company pays a dividend of $1.97 per share, for a yield of 6.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 9.56, which was below the industry average of 25.67, 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 $-40.55. AT&T Inc. fares extremely well in the ModernGraham grading system, scoring an A.  (See the full valuation)  

FedEx Corporation (FDX)

FedEx Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis. As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.08 in 2015 to an estimated $12.59 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.82% 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 FedEx Corporation revealed the company was trading above its Graham Number of $153.54. The company pays a dividend of $2 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 14.13, which was below the industry average of 17.22, 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 $-77.28. FedEx Corporation performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

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
6 Best Stocks For Value Investors This Week – 5/14/16
CBS Corporation Valuation – May 2016 $CBS

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Discovery Inc Valuation – February 2019 $DISCA
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E.W. Scripps Co Valuation – August 2018 $SSP
Cinemark Holdings Inc Valuation – August 2018 $CNK
Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B
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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.

Discovery Inc Valuation – February 2019 $DISCA

Company Profile (excerpt from Reuters): Discovery, Inc., formerly Discovery Communications, Inc., incorporated on April 28, 2008, is a global media company. The Company provides content across multiple distribution platforms, including pay-television (pay-TV), free-to-air (FTA) and broadcast television, Websites, digital distribution arrangements and content licensing agreements. The Company’s segments include U.S. Networks, which consists principally of domestic television networks and digital content services; International Networks, consisting primarily of international television networks and digital content services, and Education and Other, which consists principally of curriculum-based product and service offerings, and production studios.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DISCA – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,199,226,842 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 -15.77% Fail
6. Moderate PEmg Ratio PEmg < 20 32.05 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.05 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 1.01 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 293.13 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.88
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $12.80
MG Value based on 0% Growth $7.50
Market Implied Growth Rate 11.78%
Current Price $28.29
% of Intrinsic Value N/A

DISCOVERY COMMUNICATIONS INC. 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, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.31 in 2014 to an estimated $0.88 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.78% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into DISCOVERY COMMUNICATIONS INC. Common Stock revealed the company was trading above its Graham Number of $16.36. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 32.05, which was above the industry average of 31.72. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.9.

DISCOVERY COMMUNICATIONS INC. Common Stock scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.90
Graham Number $16.36
PEmg 32.05
Current Ratio 1.01
PB Ratio 2.05
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,914,000,000
Total Current Liabilities $3,860,000,000
Long-Term Debt $15,829,000,000
Total Assets $32,912,000,000
Intangible Assets $26,294,000,000
Total Liabilities $23,093,000,000
Shares Outstanding (Diluted Average) 713,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.98
Dec2017 -$0.59
Dec2016 $1.96
Dec2015 $1.58
Dec2014 $1.66
Dec2013 $1.49
Dec2012 $0.62
Dec2011 $1.40
Dec2010 $0.76
Dec2009 $0.64
Dec2008 $0.49
Dec2007 -$0.12
Dec2006 -$0.08
Dec2005 $0.06
Dec2004 $0.12
Dec2003 -$0.10
Dec2002 -$0.23
Dec2001 -$1.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.88
Dec2017 $0.96
Dec2016 $1.65
Dec2015 $1.44
Dec2014 $1.31
Dec2013 $1.08
Dec2012 $0.85
Dec2011 $0.85
Dec2010 $0.50
Dec2009 $0.31
Dec2008 $0.13
Dec2007 -$0.04
Dec2006 -$0.01
Dec2005 -$0.07
Dec2004 -$0.18
Dec2003 -$0.31
Dec2002 -$0.37

Recommended Reading:

Other ModernGraham posts about the company

Discovery Inc Valuation – April 2018 $DISCA
Discovery Communications Inc Valuation – August 2016 $DISCA
Discovery Communications Analysis – 2015 Annual Update $DISCA
15 Companies in the Spotlight This Week – 5/31/14
Discovery Communications 2014 Annual Valuation $DISCA

Other ModernGraham posts about related companies

Comcast Corp Valuation – January 2019 $CMCSA
Viacom Inc Valuation – January 2019 $VIAB
Twenty-First Century Fox Inc Valuation – January 2019 $FOX
Walt Disney Co Valuation – November 2018 $DIS
Tegna Inc Valuation – August 2018 $TGNA
E.W. Scripps Co Valuation – August 2018 $SSP
Cinemark Holdings Inc Valuation – August 2018 $CNK
Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B
AMC Networks Inc Valuation – July 2018 $AMCX
International Speedway Corp Valuation – July 2018 $ISCA

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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