Centene Corp Valuation – March 2019 $CNC

Company Profile (excerpt from Reuters): Centene Corporation, incorporated on September 26, 2001, is a healthcare company. The Company provides a portfolio of services to government sponsored healthcare programs, focusing on under-insured and uninsured individuals. The Company operates through two segments: Managed Care and Specialty Services. It provides member-focused services through locally based staff by assisting in accessing care, coordinating referrals to related health and social services and addressing member concerns and questions. It also provides education and outreach programs to inform and assist members in accessing appropriate healthcare services. The Managed Care segment consists of the Company’s health plans, including all of the functions needed to operate them. The Specialty Services segment consists of the Company’s specialty companies, offering auxiliary healthcare services and products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CNC – 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 $25,290,159,805 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.00 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 769.31% Pass
6. Moderate PEmg Ratio PEmg < 20 21.95 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.34 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 1.00 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 246.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.79
MG Growth Estimate 15.00%
MG Value $107.34
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $40.43
MG Value based on 0% Growth $23.70
Market Implied Growth Rate 6.72%
Current Price $61.17
% of Intrinsic Value 56.99%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.96 in 2015 to an estimated $2.79 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.72% 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 Centene Corp revealed the company was trading above its Graham Number of $49.9. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 21.94, which was below the industry average of 53.13, 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 $-18.78.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.78
Graham Number $49.90
PEmg 21.94
Current Ratio 1.00
PB Ratio 2.33
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 $11,998,000,000
Total Current Liabilities $11,971,000,000
Long-Term Debt $6,648,000,000
Total Assets $30,901,000,000
Intangible Assets $9,254,000,000
Total Liabilities $19,888,000,000
Shares Outstanding (Diluted Average) 420,226,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.18
Dec2018 $2.26
Dec2017 $2.34
Dec2016 $1.71
Dec2015 $1.44
Dec2014 $1.13
Dec2013 $0.74
Dec2012 $0.01
Dec2011 $0.53
Dec2010 $0.47
Dec2009 $0.47
Dec2008 $0.47
Dec2007 $0.41
Dec2006 -$0.25
Dec2005 $0.31
Dec2004 $0.26
Dec2003 $0.22
Dec2002 $0.18
Dec2001 $0.13
Dec2000 $0.09
Dec1999 -$0.92

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.79
Dec2018 $1.99
Dec2017 $1.72
Dec2016 $1.28
Dec2015 $0.96
Dec2014 $0.68
Dec2013 $0.45
Dec2012 $0.33
Dec2011 $0.49
Dec2010 $0.41
Dec2009 $0.35
Dec2008 $0.27
Dec2007 $0.18
Dec2006 $0.09
Dec2005 $0.25
Dec2004 $0.20
Dec2003 $0.10

Recommended Reading:

Other ModernGraham posts about the company

Centene Corp Valuation – May 2018 $CNC
Centene Corp Valuation – Initial Coverage $CNC

Other ModernGraham posts about related companies

Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX
IQVIA Holdings Inc Valuation – February 2019 $IQV
Thermo Fisher Scientific Inc Valuation – February 2019 $TMO
Illumina Inc Valuation – February 2019 $ILMN
Waters Corp Valuation – February 2019 $WAT
Cerner Corp Valuation – February 2019 $CERN
HCA Healthcare Inc Valuation – February 2019 $HCA
Stryker Corp Valuation – February 2019 $SYK
Align Technology Inc Valuation – February 2019 $ALGN

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.

Centene Corp Valuation – May 2018 $CNC

Company Profile (excerpt from Reuters): Centene Corporation, incorporated on September 26, 2001, is a healthcare company. The Company provides a portfolio of services to government sponsored healthcare programs, focusing on under-insured and uninsured individuals. The Company operates through two segments: Managed Care and Specialty Services. It provides member-focused services through locally based staff by assisting in accessing care, coordinating referrals to related health and social services and addressing member concerns and questions. It also provides education and outreach programs to inform and assist members in accessing appropriate healthcare services. The Managed Care segment consists of the Company’s health plans, including all of the functions needed to operate them. The Specialty Services segment consists of the Company’s specialty companies, offering auxiliary healthcare services and products.

CNC Chart

CNC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CNC – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,333,704,667 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.01 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 410.02% Pass
6. Moderate PEmg Ratio PEmg < 20 24.21 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.74 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 60.14 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 $4.77
MG Growth Estimate 15.00%
MG Value $183.67
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $69.17
MG Value based on 0% Growth $40.55
Market Implied Growth Rate 7.85%
Current Price $115.49
% of Intrinsic Value 62.88%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.35 in 2014 to an estimated $4.77 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.85% 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 Centene Corp revealed the company was trading above its Graham Number of $78.3. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 24.21, which was below the industry average of 42.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.66.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.66
Graham Number $78.30
PEmg 24.21
Current Ratio 1.01
PB Ratio 2.74
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $10,976,000,000
Total Current Liabilities $10,890,000,000
Long-Term Debt $5,172,000,000
Total Assets $25,170,000,000
Intangible Assets $6,814,000,000
Total Liabilities $17,667,000,000
Shares Outstanding (Diluted Average) 177,690,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.90
Dec2017 $4.69
Dec2016 $3.43
Dec2015 $2.88
Dec2014 $2.25
Dec2013 $1.47
Dec2012 $0.02
Dec2011 $1.06
Dec2010 $0.94
Dec2009 $0.95
Dec2008 $0.94
Dec2007 $0.82
Dec2006 -$0.51
Dec2005 $0.62
Dec2004 $0.51
Dec2003 $0.44
Dec2002 $0.37
Dec2001 $0.27
Dec2000 $0.19
Dec1999 -$1.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.77
Dec2017 $3.45
Dec2016 $2.56
Dec2015 $1.93
Dec2014 $1.35
Dec2013 $0.90
Dec2012 $0.67
Dec2011 $0.97
Dec2010 $0.83
Dec2009 $0.70
Dec2008 $0.55
Dec2007 $0.36
Dec2006 $0.18
Dec2005 $0.50
Dec2004 $0.41
Dec2003 $0.20
Dec2002 -$0.01

Recommended Reading:

Other ModernGraham posts about the company

Centene Corp Valuation – Initial Coverage $CNC

Other ModernGraham posts about related companies

Thermo Fisher Scientific Inc Valuation – April 2018 $TMO
Illumina Inc Valuation – April 2018 $ILMN
Waters Corp Valuation – April 2018 $WAT
Align Technology Inc Valuation – April 2018 $ALGN
HCA Healthcare Inc Valuation – April 2018 $HCA
Express Scripts Holding Co Valuation – April 2018 $ESRX
Stryker Corp Valuation – April 2018 $SYK
Cerner Corporation Valuation – April 2018 $CERN
Quest Diagnostics Inc Valuation – April 2018 $DGX
Laboratory Corporation of America Holdings Valuation – March 2018 $LH

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.

Centene Corp Valuation – Initial Coverage $CNC

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 – January 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 Centene Corp (CNC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Centene Corporation is a diversified healthcare company that provides programs and services to government sponsored healthcare programs. The Company also provides education and outreach programs to inform and assist members in accessing appropriate healthcare services. The Company operates through two segments. The Managed Care segment provides health plan coverage to individuals, through government subsidized programs, including Medicaid, the State Children’s Health Insurance Program (CHIP), Long Term Care (LTC), Foster Care, dual-eligible individuals (Duals) and the Supplemental Security Income Program, also known as the Aged, Blind or Disabled Program (ABD). The Specialty Services segment consists of its specialty companies offering a range of healthcare services and products to state programs, correctional facilities, healthcare organizations, employer groups and other commercial organizations.

CNC Chart

CNC data by YCharts

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

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CNC – January 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 $10,996,411,003 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.86 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 190.94% Pass
6. Moderate PEmg Ratio PEmg < 20 27.69 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.97 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 0.86 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.95 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 $2.33
MG Growth Estimate 15.00%
MG Value $89.65
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $33.77
MG Value based on 0% Growth $19.79
Market Implied Growth Rate 9.59%
Current Price $64.48
% of Intrinsic Value 71.92%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.67 in 2012 to an estimated $2.33 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.59% 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 Centene Corp revealed the company was trading above its Graham Number of $45.39. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 27.69, which was below the industry average of 32.29, 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 $-35.39.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$35.39
Graham Number $45.39
PEmg 27.69
Current Ratio 0.86
PB Ratio 1.97
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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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 9/1/2016
Total Current Assets $7,755,000,000
Total Current Liabilities $9,023,000,000
Long-Term Debt $3,744,000,000
Total Assets $19,634,000,000
Intangible Assets $6,296,000,000
Total Liabilities $13,924,000,000
Shares Outstanding (Diluted Average) 174,312,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.74
Dec2015 $2.88
Dec2014 $2.25
Dec2013 $1.47
Dec2012 $0.02
Dec2011 $1.06
Dec2010 $0.94
Dec2009 $0.95
Dec2008 $0.94
Dec2007 $0.82
Dec2006 -$0.51
Dec2005 $0.62
Dec2004 $0.51
Dec2003 $0.44
Dec2002 $0.37
Dec2001 $0.27
Dec2000 $0.19
Dec1999 -$1.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.33
Dec2015 $1.93
Dec2014 $1.35
Dec2013 $0.90
Dec2012 $0.67
Dec2011 $0.97
Dec2010 $0.83
Dec2009 $0.70
Dec2008 $0.55
Dec2007 $0.36
Dec2006 $0.18
Dec2005 $0.50
Dec2004 $0.41
Dec2003 $0.20
Dec2002 -$0.01
Dec2001 -$0.23
Dec2000 -$0.43

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Invacare Corporation Valuation – Initial Coverage $IVC
Becton Dickinson and Co Valuation – January 2017 $BDX
Select Medical Holdings Corp Valuation – Initial Coverage $SEM
Chemed Corporation Valuation – Initial Coverage $CHE
Inogen Inc Valuation – Initial Coverage $INGN
Surgical Care Affiliates Inc Valuation – Initial Coverage $SCAI
Thermo Fisher Scientific Inc Valuation – December 2016 $TMO
Illumina Inc Valuation – Initial Coverage $ILMN
Thermo Fisher Scientific Inc Valuation – November 2016 $TMO
Waters Corporation Valuation – November 2016 $WAT

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.

Hologic Inc Valuation – March 2019 #HOLX

Company Profile (excerpt from Reuters): Hologic, Inc., incorporated on January 18, 1990, is a developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products with an emphasis on women’s health. The Company operates through four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health. The Company sells and services its products through a combination of direct sales and service personnel and a network of independent distributors and sales representatives.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HOLX – 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 $13,730,000,796 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.30 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 6528.57% Pass
6. Moderate PEmg Ratio PEmg < 20 33.53 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.36 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.30 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.66 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.41
MG Growth Estimate 15.00%
MG Value $54.13
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $20.39
MG Value based on 0% Growth $11.95
Market Implied Growth Rate 12.51%
Current Price $47.14
% of Intrinsic Value 87.09%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $-0.7 in 2015 to an estimated $1.41 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 12.51% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Hologic, Inc. revealed the company was trading above its Graham Number of $22.04. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 33.53, which was below the industry average of 53.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.51.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.51
Graham Number $22.04
PEmg 33.53
Current Ratio 1.30
PB Ratio 5.36
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 $1,401,900,000
Total Current Liabilities $1,077,700,000
Long-Term Debt $2,807,900,000
Total Assets $6,931,500,000
Intangible Assets $4,965,100,000
Total Liabilities $4,537,100,000
Shares Outstanding (Diluted Average) 272,372,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.40
Sep2018 -$0.40
Sep2017 $2.64
Sep2016 $1.16
Sep2015 $0.45
Sep2014 $0.06
Sep2013 -$4.36
Sep2012 -$0.28
Sep2011 $0.59
Sep2010 -$0.24
Sep2009 -$8.64
Sep2008 -$1.57
Sep2007 $0.86
Sep2006 $0.28
Sep2005 $0.32
Sep2004 $0.15
Sep2003 $0.04
Sep2002 $0.00
Sep2001 -$0.34
Sep2000 -$0.31
Sep1999 -$0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.41
Sep2018 $0.87
Sep2017 $1.00
Sep2016 -$0.08
Sep2015 -$0.70
Sep2014 -$1.14
Sep2013 -$2.02
Sep2012 -$1.24
Sep2011 -$1.75
Sep2010 -$2.56
Sep2009 -$3.07
Sep2008 -$0.19
Sep2007 $0.45
Sep2006 $0.21
Sep2005 $0.13
Sep2004 -$0.01
Sep2003 -$0.10

Recommended Reading:

Other ModernGraham posts about the company

Hologic Inc Valuation – June 2018 $HOLX
Hologic Inc Valuation – Initial Coverage $HOLX

Other ModernGraham posts about related companies

Mettler-Toledo International Inc Valuation – March 2019 #MTD
DaVita Inc Valuation – March 2019 #DVA
Danaher Corp Valuation – March 2019 #DHR
Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC

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.

Mettler-Toledo International Inc Valuation – March 2019 #MTD

Company Profile (excerpt from Reuters): Mettler-Toledo International Inc., incorporated on December 6, 1991, is a supplier of precision instruments and services. The Company operates through five segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company is also a provider of analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development, and process analytics instruments used for in-line measurement in production processes. In addition, the Company is also a supplier of end-of-line inspection systems used in production and packaging for food, pharmaceutical and other industries. The Company serves food and beverage producers; food retailers; chemical, specialty chemicals and cosmetics companies, and the transportation and logistics industry, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MTD – 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 $17,570,648,912 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.42 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 134.87% Pass
6. Moderate PEmg Ratio PEmg < 20 38.42 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 30.56 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 1.42 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.16 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 $18.41
MG Growth Estimate 10.18%
MG Value $531.23
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $266.95
MG Value based on 0% Growth $156.49
Market Implied Growth Rate 14.96%
Current Price $707.41
% of Intrinsic Value 133.17%

Mettler-Toledo International 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 $10.97 in 2015 to an estimated $18.41 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.96% 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 Mettler-Toledo International Inc. revealed the company was trading above its Graham Number of $109.73. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 38.42, which was below the industry average of 53.13, 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 $-38.56.

Mettler-Toledo International Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$38.56
Graham Number $109.73
PEmg 38.42
Current Ratio 1.42
PB Ratio 30.56
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 $1,045,860,000
Total Current Liabilities $734,434,000
Long-Term Debt $985,021,000
Total Assets $2,618,847,000
Intangible Assets $752,088,000
Total Liabilities $2,028,784,000
Shares Outstanding (Diluted Average) 25,491,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $22.60
Dec2018 $19.88
Dec2017 $14.24
Dec2016 $14.22
Dec2015 $12.48
Dec2014 $11.44
Dec2013 $9.96
Dec2012 $9.14
Dec2011 $8.21
Dec2010 $6.80
Dec2009 $5.03
Dec2008 $5.79
Dec2007 $4.70
Dec2006 $3.86
Dec2005 $2.52
Dec2004 $2.37
Dec2003 $2.11
Dec2002 $2.21
Dec2001 $1.68
Dec2000 $1.66
Dec1999 $1.16

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $18.41
Dec2018 $15.69
Dec2017 $13.22
Dec2016 $12.29
Dec2015 $10.97
Dec2014 $9.85
Dec2013 $8.64
Dec2012 $7.65
Dec2011 $6.64
Dec2010 $5.65
Dec2009 $4.84
Dec2008 $4.45
Dec2007 $3.56
Dec2006 $2.86
Dec2005 $2.30
Dec2004 $2.13
Dec2003 $1.93

Recommended Reading:

Other ModernGraham posts about the company

Mettler-Toledo International Inc Valuation – June 2018 $MTD
Mettler-Toledo International Inc Valuation – Initial Coverage $MTD

Other ModernGraham posts about related companies

DaVita Inc Valuation – March 2019 #DVA
Danaher Corp Valuation – March 2019 #DHR
Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT

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.

DaVita Inc Valuation – March 2019 #DVA

Company Profile (excerpt from Reuters): DaVita Inc., formerly DaVita HealthCare Partners Inc., incorporated on April 4, 1994, operates two divisions: DaVita Kidney Care (Kidney Care) and DaVita Medical Group (DMG). The Kidney Care division consists of the Company’s the United States dialysis and related lab services, its ancillary services and strategic initiatives, including its international operations, and its corporate administrative support. Its DMG division is a patient- and physician-focused integrated healthcare delivery and management company that provides medical services to members primarily through capitation contracts with some of the nation’s health plans. The Company’s segments include U.S. dialysis and related lab services, DMG, and Other-Ancillary services and strategic initiatives. Its U.S. dialysis and related lab services line of business provide kidney dialysis services in the United States for patients suffering from chronic kidney failure, also known as end stage renal disease (ESRD). In addition, as of December 31, 2016, the Company operated or provided administrative services to 154 outpatient dialysis centers serving patients located in 11 countries outside of the United States.

Downloadable PDF version of this valuation:

ModernGraham Valuation of DVA – 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 $8,919,039,746 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.72 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 17.39% Fail
6. Moderate PEmg Ratio PEmg < 20 18.25 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.29 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 1.72 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.31 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 $2.94
MG Growth Estimate 3.21%
MG Value $43.95
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $42.70
MG Value based on 0% Growth $25.03
Market Implied Growth Rate 4.87%
Current Price $53.74
% of Intrinsic Value 122.29%

Davita Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the net 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 $2.43 in 2015 to an estimated $2.94 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.87% 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 Davita Inc revealed the company was trading above its Graham Number of $45.04. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 18.25, which was below the industry average of 53.13, 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 $-40.73.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$40.73
Graham Number $45.04
PEmg 18.25
Current Ratio 1.72
PB Ratio 2.29
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 $8,424,159,000
Total Current Liabilities $4,891,161,000
Long-Term Debt $8,172,847,000
Total Assets $19,110,252,000
Intangible Assets $6,960,806,000
Total Liabilities $15,201,854,000
Shares Outstanding (Diluted Average) 166,413,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.05
Dec2018 $0.92
Dec2017 $3.47
Dec2016 $4.29
Dec2015 $1.25
Dec2014 $3.33
Dec2013 $2.95
Dec2012 $2.74
Dec2011 $2.48
Dec2010 $1.97
Dec2009 $2.03
Dec2008 $1.77
Dec2007 $1.78
Dec2006 $1.37
Dec2005 $1.10
Dec2004 $1.08
Dec2003 $0.78
Dec2002 $0.61
Dec2001 $0.48
Dec2000 $0.05
Dec1999 -$0.60

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.94
Dec2018 $2.48
Dec2017 $3.19
Dec2016 $3.01
Dec2015 $2.43
Dec2014 $2.91
Dec2013 $2.61
Dec2012 $2.36
Dec2011 $2.11
Dec2010 $1.88
Dec2009 $1.76
Dec2008 $1.55
Dec2007 $1.37
Dec2006 $1.11
Dec2005 $0.92
Dec2004 $0.76
Dec2003 $0.48

Recommended Reading:

Other ModernGraham posts about the company

DaVita Inc Valuation – June 2018 $DVA
Davita Inc Valuation – February 2017 $DVA
DaVita HealthCare Partners Inc Valuation – November 2015 Update $DVA
30 Companies in the Spotlight This Week – 11/15/14
DaVita Healthcare Partners Inc. Annual Valuation – 2014 $DVA

Other ModernGraham posts about related companies

Danaher Corp Valuation – March 2019 #DHR
Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX

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.

Danaher Corp Valuation – March 2019 #DHR

Company Profile (excerpt from Reuters): Danaher Corporation (Danaher), incorporated on October 3, 1986, designs, manufactures and markets professional, medical, industrial and commercial products and services. As of December 31, 2016, the Company’s research and development, manufacturing, sales, distribution, service and administrative facilities were located in over 60 countries. Danaher operates through four segments: Life Sciences; Diagnostics; Dental, and Environmental & Applied Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DHR – 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 $91,024,671,224 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.47 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 29.20% Fail
6. Moderate PEmg Ratio PEmg < 20 31.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.22 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.30 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.01
MG Growth Estimate 0.16%
MG Value $35.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $58.09
MG Value based on 0% Growth $34.05
Market Implied Growth Rate 11.69%
Current Price $127.68
% of Intrinsic Value 361.24%

Danaher 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 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. 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 $3.96 in 2015 to an estimated $4.01 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.69% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Danaher Corporation revealed the company was trading above its Graham Number of $63.81. The company pays a dividend of $0.64 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 31.87, which was below the industry average of 53.13, 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 $-17.6.

Danaher 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) -$17.60
Graham Number $63.81
PEmg 31.87
Current Ratio 1.47
PB Ratio 3.22
Current Dividend $0.64
Dividend Yield 0.50%
Number of Consecutive Years of Dividend Growth 1

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 $7,093,800,000
Total Current Liabilities $4,841,500,000
Long-Term Debt $9,688,500,000
Total Assets $47,832,500,000
Intangible Assets $37,579,100,000
Total Liabilities $19,605,800,000
Shares Outstanding (Diluted Average) 711,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.50
Dec2018 $3.74
Dec2017 $3.53
Dec2016 $3.65
Dec2015 $4.74
Dec2014 $3.63
Dec2013 $3.80
Dec2012 $3.36
Dec2011 $3.11
Dec2010 $2.64
Dec2009 $1.73
Dec2008 $1.98
Dec2007 $2.10
Dec2006 $1.74
Dec2005 $1.38
Dec2004 $1.15
Dec2003 $0.84
Dec2002 $0.47
Dec2001 $0.50
Dec2000 $0.56
Dec1999 $0.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.01
Dec2018 $3.79
Dec2017 $3.84
Dec2016 $3.94
Dec2015 $3.96
Dec2014 $3.49
Dec2013 $3.25
Dec2012 $2.84
Dec2011 $2.49
Dec2010 $2.13
Dec2009 $1.85
Dec2008 $1.83
Dec2007 $1.65
Dec2006 $1.32
Dec2005 $1.03
Dec2004 $0.81
Dec2003 $0.61

Recommended Reading:

Other ModernGraham posts about the company

Danaher Corp Valuation – May 2018 $DHR
Danaher Corporation Valuation – February 2017 $DHR
Danaher Corporation Valuation – November 2015 Update $DHR
Danaher Corporation Analysis – August 2015 Update $DHR
47 Companies in the Spotlight This Week – 5/16/15

Other ModernGraham posts about related companies

Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX
IQVIA Holdings Inc Valuation – February 2019 $IQV

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.

Agilent Technologies Inc Valuation – March 2019 #A

Company Profile (excerpt from Reuters): Agilent Technologies, Inc., incorporated on May 4, 1999, provides application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. The Company serves the life sciences, diagnostics and applied chemical markets. The Company has three business segments: life sciences and applied markets business, diagnostics and genomics business, and Agilent CrossLab business. The life sciences and applied markets business segment brings together the Company’s analytical laboratory instrumentation and informatics. The Company’s diagnostics and genomics business segment includes the reagent partnership, pathology, companion diagnostics, genomics and the nucleic acid solutions businesses. The Company’s Agilent CrossLab business segment spans the entire lab with its consumables and services portfolio.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of A – 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 $24,759,898,745 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.39 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -24.07% Fail
6. Moderate PEmg Ratio PEmg < 20 39.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.99 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 3.39 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.69 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.96
MG Growth Estimate 0.62%
MG Value $19.11
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $28.45
MG Value based on 0% Growth $16.68
Market Implied Growth Rate 15.62%
Current Price $77.98
% of Intrinsic Value 407.98%

Agilent Technologies Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.88 in 2015 to an estimated $1.96 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.62% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Agilent Technologies Inc revealed the company was trading above its Graham Number of $31.39. The company pays a dividend of $0.6 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 39.75, which was below the industry average of 53.13, 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 $-0.63.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.63
Graham Number $31.39
PEmg 39.75
Current Ratio 3.39
PB Ratio 4.99
Current Dividend $0.60
Dividend Yield 0.76%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $3,712,000,000
Total Current Liabilities $1,095,000,000
Long-Term Debt $1,798,000,000
Total Assets $8,952,000,000
Intangible Assets $3,699,000,000
Total Liabilities $3,916,000,000
Shares Outstanding (Diluted Average) 322,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.05
Oct2018 $0.97
Oct2017 $2.10
Oct2016 $1.40
Oct2015 $1.20
Oct2014 $1.62
Oct2013 $2.13
Oct2012 $3.27
Oct2011 $2.85
Oct2010 $1.94
Oct2009 -$0.09
Oct2008 $1.87
Oct2007 $1.57
Oct2006 $7.50
Oct2005 $0.65
Oct2004 $0.75
Oct2003 -$4.35
Oct2002 -$2.22
Oct2001 $0.38
Oct2000 $1.66
Oct1999 $1.35

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.96
Oct2018 $1.43
Oct2017 $1.67
Oct2016 $1.61
Oct2015 $1.88
Oct2014 $2.27
Oct2013 $2.40
Oct2012 $2.35
Oct2011 $1.80
Oct2010 $1.71
Oct2009 $1.83
Oct2008 $2.68
Oct2007 $2.46
Oct2006 $2.10
Oct2005 -$0.72
Oct2004 -$1.19
Oct2003 -$1.65

Recommended Reading:

Other ModernGraham posts about the company

Agilent Technologies Inc Valuation – May 2018 $A
Agilent Technologies Inc Valuation – February 2017 $A
Agilent Technologies Inc Valuation – August 2016 $A
Agilent Technologies Inc Valuation – February 2016
Agilent Technologies Inc. Valuation – October 2015 Update $A

Other ModernGraham posts about related companies

ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX
IQVIA Holdings Inc Valuation – February 2019 $IQV
Thermo Fisher Scientific Inc Valuation – February 2019 $TMO

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.

ResMed Inc Valuation – March 2019 #RMD

Company Profile (excerpt from Reuters): ResMed Inc., incorporated on March 31, 1994, is a holding company. The Company is engaged in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders, including sleep disordered breathing (SDB), chronic obstructive pulmonary disease (COPD), neuromuscular disease and other diseases. SDB includes obstructive sleep apnea (OSA) and other respiratory disorders that occur during sleep. The Company’s cloud-based software digital health applications, along with its devices, are designed to provide connected care to improve patient outcomes. The Company offers a treatment, nasal Continuous Positive Airway Pressure (CPAP), for OSA. CPAP systems deliver pressurized air, typically through a nasal mask, to prevent collapse of the upper airway during sleep. Its manufacturing operations are located in Australia, Singapore, Malaysia, France and the United States.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RMD – 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 $14,454,671,393 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.44 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 74.20% Pass
6. Moderate PEmg Ratio PEmg < 20 39.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.46 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.44 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.89 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 $2.57
MG Growth Estimate 2.51%
MG Value $34.82
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $37.32
MG Value based on 0% Growth $21.88
Market Implied Growth Rate 15.38%
Current Price $101.06
% of Intrinsic Value 290.28%

ResMed Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.2 in 2015 to an estimated $2.57 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.38% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into ResMed Inc. revealed the company was trading above its Graham Number of $31.42. The company pays a dividend of $1.4 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 39.26, which was below the industry average of 53.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.82.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.82
Graham Number $31.42
PEmg 39.26
Current Ratio 2.44
PB Ratio 7.46
Current Dividend $1.40
Dividend Yield 1.39%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,063,539,000
Total Current Liabilities $436,443,000
Long-Term Debt $1,185,500,000
Total Assets $3,859,816,000
Intangible Assets $2,243,971,000
Total Liabilities $1,903,772,000
Shares Outstanding (Diluted Average) 144,349,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.04
Jun2018 $2.19
Jun2017 $2.40
Jun2016 $2.49
Jun2015 $2.47
Jun2014 $2.39
Jun2013 $2.10
Jun2012 $1.71
Jun2011 $1.44
Jun2010 $1.23
Jun2009 $0.95
Jun2008 $0.70
Jun2007 $0.43
Jun2006 $0.58
Jun2005 $0.46
Jun2004 $0.41
Jun2003 $0.33
Jun2002 $0.28
Jun2001 $0.09
Jun2000 $0.17
Jun1999 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.57
Jun2018 $2.36
Jun2017 $2.42
Jun2016 $2.36
Jun2015 $2.20
Jun2014 $1.97
Jun2013 $1.67
Jun2012 $1.37
Jun2011 $1.12
Jun2010 $0.90
Jun2009 $0.70
Jun2008 $0.55
Jun2007 $0.46
Jun2006 $0.46
Jun2005 $0.37
Jun2004 $0.30
Jun2003 $0.23

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX
IQVIA Holdings Inc Valuation – February 2019 $IQV
Thermo Fisher Scientific Inc Valuation – February 2019 $TMO
Illumina Inc Valuation – February 2019 $ILMN

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.

Cooper Companies Inc Valuation – March 2019 #COO

Company Profile (excerpt from Reuters): The Cooper Companies, Inc., incorporated on March 4, 1980, is a global medical device company. The Company operates through two business units: CooperVision, Inc. (CooperVision ) and CooperSurgical, Inc. (CooperSurgical). CooperVision offers soft contact lenses for the vision correction market. CooperSurgical primarily develops, manufactures, markets medical devices and procedures solutions, and provides services to improve health care delivery to families.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COO – 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 $14,341,367,792 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.03 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 96.04% Pass
6. Moderate PEmg Ratio PEmg < 20 40.99 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.39 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 2.03 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.58 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 $7.09
MG Growth Estimate 6.46%
MG Value $151.90
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $102.82
MG Value based on 0% Growth $60.28
Market Implied Growth Rate 16.24%
Current Price $290.67
% of Intrinsic Value 191.36%

Cooper Companies Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.96 in 2015 to an estimated $7.09 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.24% 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 Cooper Companies Inc revealed the company was trading above its Graham Number of $131.68. The company pays a dividend of $0.06 per share, for a yield of 0% Its PEmg (price over earnings per share – ModernGraham) was 40.99, which was below the industry average of 53.13, 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 $-34.28.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$34.28
Graham Number $131.68
PEmg 40.99
Current Ratio 2.03
PB Ratio 4.39
Current Dividend $0.06
Dividend Yield 0.02%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $1,090,900,000
Total Current Liabilities $536,500,000
Long-Term Debt $1,985,700,000
Total Assets $6,112,800,000
Intangible Assets $3,913,400,000
Total Liabilities $2,805,000,000
Shares Outstanding (Diluted Average) 50,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.45
Oct2018 $2.81
Oct2017 $7.52
Oct2016 $5.59
Oct2015 $4.14
Oct2014 $5.51
Oct2013 $5.96
Oct2012 $5.05
Oct2011 $3.63
Oct2010 $2.43
Oct2009 $2.21
Oct2008 $1.43
Oct2007 -$0.25
Oct2006 $1.44
Oct2005 $2.04
Oct2004 $2.59
Oct2003 $2.09
Oct2002 $1.57
Oct2001 $1.22
Oct2000 $1.00
Oct1999 $0.88

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.09
Oct2018 $4.98
Oct2017 $5.96
Oct2016 $5.20
Oct2015 $4.96
Oct2014 $5.08
Oct2013 $4.53
Oct2012 $3.53
Oct2011 $2.47
Oct2010 $1.75
Oct2009 $1.40
Oct2008 $1.14
Oct2007 $1.19
Oct2006 $1.93
Oct2005 $2.08
Oct2004 $1.96
Oct2003 $1.55

Recommended Reading:

Other ModernGraham posts about the company

Cooper Companies Inc Valuation – May 2018 $COO
Cooper Companies Inc Valuation – Initial Coverage $COO

Other ModernGraham posts about related companies

Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX
IQVIA Holdings Inc Valuation – February 2019 $IQV
Thermo Fisher Scientific Inc Valuation – February 2019 $TMO
Illumina Inc Valuation – February 2019 $ILMN
Waters Corp Valuation – February 2019 $WAT

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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