Cinemark Holdings Inc Valuation – August 2018 $CNK

Company Profile (excerpt from Reuters): Cinemark Holdings, Inc. (Cinemark), incorporated on August 2, 2006, is engaged in the motion picture exhibition business with theatres in the United States (U.S.), Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Paraguay, Curacao and Bolivia. The Company manages its business in two segments: U.S. markets and international markets. The international segment consists of operations in Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. As of December 31, 2016, the Company operated 526 theatres and 5,903 screens in the United States and Latin America. As of December 31, 2016, its the United States circuit had 339 theatres and 4,559 screens in 41 states and its international circuit had 187 theatres and 1,344 screens in 15 countries. It develops new platforms for its theatre circuit, such as XD, Cinemark Reserve, Luxury Lounger reclining seats, CineArts and other concepts. It plays mainstream films from various genres, such as animated films, family films, dramas, comedies, horror and action films. It offers content in both two-dimension (2D) and three-dimension (3D) formats in all of its theatres.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CNK – August 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 $4,251,249,242 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.53 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 93.64% Pass
6. Moderate PEmg Ratio PEmg < 20 17.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.83 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 1.53 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.69 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 $2.05
MG Growth Estimate 6.53%
MG Value $44.12
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $29.69
MG Value based on 0% Growth $17.40
Market Implied Growth Rate 4.52%
Current Price $35.92
% of Intrinsic Value 81.41%

Cinemark Holdings, 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.43 in 2014 to an estimated $2.05 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.52% 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 Cinemark Holdings, Inc. revealed the company was trading above its Graham Number of $22.88. The company pays a dividend of $1.16 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.54, which was below the industry average of 38.97, 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 $-20.23.

Cinemark Holdings, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$20.23
Graham Number $22.88
PEmg 17.54
Current Ratio 1.53
PB Ratio 2.83
Current Dividend $1.16
Dividend Yield 3.23%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $591,740,000
Total Current Liabilities $387,349,000
Long-Term Debt $1,775,252,000
Total Assets $4,413,471,000
Intangible Assets $1,619,109,000
Total Liabilities $2,941,480,000
Shares Outstanding (Diluted Average) 116,143,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.94
Dec2017 $2.26
Dec2016 $2.19
Dec2015 $1.87
Dec2014 $1.66
Dec2013 $1.28
Dec2012 $1.47
Dec2011 $1.14
Dec2010 $1.29
Dec2009 $0.87
Dec2008 -$0.45
Dec2007 $0.85
Dec2006 $0.01
Dec2005 -$0.31
Dec2004 -$0.13
Dec2003 $0.37
Dec2002 $0.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.05
Dec2017 $2.02
Dec2016 $1.83
Dec2015 $1.59
Dec2014 $1.43
Dec2013 $1.28
Dec2012 $1.14
Dec2011 $0.89
Dec2010 $0.69
Dec2009 $0.32
Dec2008 $0.03
Dec2007 $0.23
Dec2006 -$0.04
Dec2005 -$0.02
Dec2004 $0.12
Dec2003 $0.20
Dec2002 $0.10

Recommended Reading:

Other ModernGraham posts about the company

4 Best Stocks for Value Investors This Week – 1/28/17
Cinemark Holdings Inc Valuation – Initial Coverage $CNK

Other ModernGraham posts about related companies

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AMC Networks Inc Valuation – July 2018 $AMCX
International Speedway Corp Valuation – July 2018 $ISCA
Cineplex Inc Valuation – July 2018 $TSE-CGX
Graham Holdings Co Valuation – July 2018 $GHC
News Corp Valuation – June 2018 $NWS
Netflix Inc Valuation – June 2018 $NFLX
CBS Corporation Valuation – April 2018 $CBS
Discovery Inc Valuation – April 2018 $DISCA
Time Warner Inc Valuation – March 2018 $TWX

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.

Cinemark Holdings Inc Valuation – Initial Coverage $CNK

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 Cinemark Holdings Inc (CNK) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cinemark Holdings, Inc. (Cinemark) is engaged in the motion picture exhibition business with theatres in the United States, Brazil, Mexico, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Curacao and Bolivia. The Company manages its business in two segments: United States markets and international markets. The international segment consists of operations in Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia and Curacao. It operates approximately 500 theatres and over 5,800 screens in the United States and Latin America. Its United States circuit has approximately 340 theatres and over 4,510 screens in over 40 states and its international circuit has over 180 theatres and approximately 1,280 screens. It develops platforms for its theatre circuit, such as XD, Movie Bistro, Cinemark Reserve, Luxury Lounger reclining seats, D-BOX seating and CineArts.

CNK Chart

CNK data by YCharts

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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 CNK – 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 $4,969,084,610 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.81 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 325.20% Pass
6. Moderate PEmg Ratio PEmg < 20 24.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.00 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 1.81 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 6.39 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.72
MG Growth Estimate 7.71%
MG Value $41.19
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $24.98
MG Value based on 0% Growth $14.64
Market Implied Growth Rate 8.01%
Current Price $42.24
% of Intrinsic Value 102.54%

Cinemark Holdings, Inc. is suitable for the Enterprising Investor but not 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.14 in 2012 to an estimated $1.72 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 8.01% 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 Cinemark Holdings, Inc. revealed the company was trading above its Graham Number of $21.03. The company pays a dividend of $1.06 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 24.52, which was below the industry average of 39.27, 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 $-20.11.

Cinemark Holdings, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$20.11
Graham Number $21.03
PEmg 24.52
Current Ratio 1.81
PB Ratio 4.00
Current Dividend $1.06
Dividend Yield 2.51%
Number of Consecutive Years of Dividend Growth 1

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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 $626,920,000
Total Current Liabilities $347,209,000
Long-Term Debt $1,786,549,000
Total Assets $4,176,619,000
Intangible Assets $339,813,000
Total Liabilities $2,955,071,000
Shares Outstanding (Diluted Average) 115,793,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.87
Dec2015 $1.87
Dec2014 $1.66
Dec2013 $1.28
Dec2012 $1.47
Dec2011 $1.14
Dec2010 $1.29
Dec2009 $0.87
Dec2008 -$0.45
Dec2007 $0.85
Dec2006 $0.01
Dec2005 -$0.31
Dec2004 -$0.13
Dec2003 $0.37
Dec2002 $0.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.72
Dec2015 $1.59
Dec2014 $1.43
Dec2013 $1.28
Dec2012 $1.14
Dec2011 $0.89
Dec2010 $0.69
Dec2009 $0.32
Dec2008 $0.03
Dec2007 $0.23
Dec2006 -$0.04
Dec2005 -$0.02
Dec2004 $0.12
Dec2003 $0.20
Dec2002 $0.10

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

International Speedway Corp Valuation – Initial Coverage $ISCA
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AMC Networks Inc Valuation – December 2016 $AMCX
Charter Communications Inc Valuation – Initial Coverage $CHTR
Cineplex Inc Valuation – Initial Coverage $TSE:CGX
Twenty-First Century Fox Inc Valuation – November 2016 $FOXA
Graham Holdings Co Valuation – August 2016 $GHC
CBS Corporation Valuation – August 2016 $CBS
Twenty-First Century Fox Inc Valuation – August 2016 $FOXA
Discovery Communications Inc Valuation – August 2016 $DISCA

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.

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.

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

Other ModernGraham posts about related companies

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
AMC Networks Inc Valuation – July 2018 $AMCX

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.

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

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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.

Viacom Inc Valuation – January 2019 $VIAB

Company Profile (excerpt from Reuters): Viacom Inc., incorporated on September 22, 2005, offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Company’s Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Company’s Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands.

Downloadable PDF version of this valuation:

ModernGraham Valuation of VIAB – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,636,179,217 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.50 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 31.12% Fail
6. Moderate PEmg Ratio PEmg < 20 6.86 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.57 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 1.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.71 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 $4.23
MG Growth Estimate -1.57%
MG Value $22.62
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $61.31
MG Value based on 0% Growth $35.94
Market Implied Growth Rate -0.82%
Current Price $28.99
% of Intrinsic Value 128.16%

Viacom, Inc. Class B does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of 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 $4.72 in 2015 to an estimated $4.23 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 0.82% annual earnings loss 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 Viacom, Inc. Class B revealed the company was trading below its Graham Number of $41.02. The company pays a dividend of $0.8 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 6.86, 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 $-25.4.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$25.40
Graham Number $41.02
PEmg 6.86
Current Ratio 1.50
PB Ratio 1.57
Current Dividend $0.80
Dividend Yield 2.76%
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 $6,076,000,000
Total Current Liabilities $4,054,000,000
Long-Term Debt $9,515,000,000
Total Assets $23,783,000,000
Intangible Assets $11,922,000,000
Total Liabilities $16,318,000,000
Shares Outstanding (Diluted Average) 403,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.07
Sep2018 $4.27
Sep2017 $4.68
Sep2016 $3.61
Sep2015 $4.73
Sep2014 $5.43
Sep2013 $4.84
Sep2012 $3.69
Sep2011 $3.59
Dec2009 $2.65
Dec2008 $2.00
Dec2007 $2.72
Dec2006 $2.22
Dec2005 $1.73
Dec2004 $1.84
Dec2003 $1.52
Dec2002 $1.19
Dec2001 $0.58

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.23
Sep2018 $4.39
Sep2017 $4.52
Sep2016 $4.44
Sep2015 $4.72
Sep2014 $4.49
Sep2013 $3.80
Sep2012 $3.17
Sep2011 $2.81
Dec2009 $2.37
Dec2008 $2.19
Dec2007 $2.19
Dec2006 $1.85
Dec2005 $1.57
Dec2004 $1.33
Dec2003 $0.94
Dec2002 $0.55

Recommended Reading:

Other ModernGraham posts about the company

Viacom Inc Valuation – March 2018 $VIAB
Viacom Inc Valuation – June 2016 $VIAB
Viacom Inc. Annual Valuation – 2015 $VIAB
5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows – November 2014
5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows – October 2014

Other ModernGraham posts about related companies

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
Graham Holdings Co Valuation – July 2018 $GHC

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.

Twenty-First Century Fox Inc Valuation – January 2019 $FOX

Company Profile (excerpt from Reuters): Twenty-First Century Fox, Inc., incorporated on October 23, 2003, is a media and entertainment company. The Company’s segments include Cable Network Programming; Television; Filmed Entertainment, and Other, Corporate and Eliminations. The Company’s activities are conducted principally in the United States, the United Kingdom, Continental Europe, Asia and Latin America.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FOX – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $89,173,519,944 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.45 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 129.44% Pass
6. Moderate PEmg Ratio PEmg < 20 24.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.09 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 2.45 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.62 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 $1.97
MG Growth Estimate -3.47%
MG Value $3.07
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $28.62
MG Value based on 0% Growth $16.78
Market Implied Growth Rate 7.95%
Current Price $48.18
% of Intrinsic Value 1569.84%

Twenty-First Century Fox Inc 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 high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings 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 $2.57 in 2015 to an estimated $1.97 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.95% 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 Twenty-First Century Fox Inc Class A revealed the company was trading above its Graham Number of $20.1. The company pays a dividend of $0.36 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 24.41, 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 $-7.22.

Twenty-First Century Fox Inc 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) -$7.22
Graham Number $20.10
PEmg 24.41
Current Ratio 2.45
PB Ratio 4.09
Current Dividend $0.36
Dividend Yield 0.75%
Number of Consecutive Years of Dividend Growth 5

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 $19,128,000,000
Total Current Liabilities $7,802,000,000
Long-Term Debt $18,379,000,000
Total Assets $54,512,000,000
Intangible Assets $18,787,000,000
Total Liabilities $32,588,000,000
Shares Outstanding (Diluted Average) 1,863,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.70
Jun2018 $2.40
Jun2017 $1.59
Jun2016 $1.42
Jun2015 $3.90
Jun2014 $1.99
Jun2013 $3.03
Jun2012 $0.47
Jun2011 $1.04
Jun2010 $0.97
Jun2009 -$1.29
Jun2008 $1.81
Jun2007 $1.14
Jun2006 $0.76
Jun2005 $0.73
Jun2004 $0.58
Jun2003 $0.31
Jun2002 -$2.74
Jun2001 -$0.56
Jun2000 $0.76
Jun1999 $0.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.97
Jun2018 $2.16
Jun2017 $2.16
Jun2016 $2.35
Jun2015 $2.57
Jun2014 $1.77
Jun2013 $1.39
Jun2012 $0.58
Jun2011 $0.66
Jun2010 $0.54
Jun2009 $0.43
Jun2008 $1.20
Jun2007 $0.83
Jun2006 $0.42
Jun2005 $0.06
Jun2004 -$0.30
Jun2003 -$0.61

Recommended Reading:

Other ModernGraham posts about the company

Twenty-First Century Fox Inc Valuation – March 2018 $FOXA
10 Low PE Stock Picks for the Defensive Investor – February 2017
10 Undervalued Companies for the Defensive Investor – February 2017
10 Undervalued Companies for the Defensive Investor – January 2017
10 Undervalued Stocks for the Defensive Investor – December 2016

Other ModernGraham posts about related companies

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
Graham Holdings Co Valuation – July 2018 $GHC
News Corp Valuation – June 2018 $NWS

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.

Walt Disney Co Valuation – November 2018 $DIS

Company Profile (excerpt from Reuters): The Walt Disney Company, incorporated on July 28, 1995, is a worldwide entertainment company. The Company operates in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media. The media networks segment includes cable and broadcast television networks, television production and distribution operations, domestic television stations, and radio networks and stations. The Company’s Walt Disney Imagineering unit designs and develops new theme park concepts and attractions, as well as resort properties. The studio entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. The Company also develops and publishes games, primarily for mobile platforms, books, magazines and comic books.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DIS – November 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 $168,668,171,474 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.94 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 178.13% Pass
6. Moderate PEmg Ratio PEmg < 20 16.45 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.21 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.94 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -16.51 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 $6.89
MG Growth Estimate 10.66%
MG Value $205.58
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $99.97
MG Value based on 0% Growth $58.60
Market Implied Growth Rate 3.98%
Current Price $113.45
% of Intrinsic Value 55.19%

Walt Disney Co 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 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 $4.03 in 2015 to an estimated $6.89 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.98% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Walt Disney Co revealed the company was trading above its Graham Number of $73.44. The company pays a dividend of $1.68 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 16.45, which was below the industry average of 31.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.33.

Walt Disney Co receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.33
Graham Number $73.44
PEmg 16.45
Current Ratio 0.94
PB Ratio 3.21
Current Dividend $1.68
Dividend Yield 1.48%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $16,825,000,000
Total Current Liabilities $17,860,000,000
Long-Term Debt $17,084,000,000
Total Assets $98,598,000,000
Intangible Assets $38,081,000,000
Total Liabilities $45,766,000,000
Shares Outstanding (Diluted Average) 1,497,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.31
Sep2018 $8.36
Sep2017 $5.69
Sep2016 $5.73
Sep2015 $4.90
Sep2014 $4.26
Sep2013 $3.38
Sep2012 $3.13
Sep2011 $2.52
Sep2010 $2.03
Sep2009 $1.76
Sep2008 $2.28
Sep2007 $2.25
Sep2006 $1.64
Sep2005 $1.19
Sep2004 $1.07
Sep2003 $0.59
Sep2002 $0.60
Sep2001 -$0.02
Sep2000 $0.57
Sep1999 $0.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.89
Sep2018 $6.39
Sep2017 $5.20
Sep2016 $4.73
Sep2015 $4.03
Sep2014 $3.42
Sep2013 $2.85
Sep2012 $2.51
Sep2011 $2.19
Sep2010 $2.01
Sep2009 $1.94
Sep2008 $1.92
Sep2007 $1.61
Sep2006 $1.20
Sep2005 $0.88
Sep2004 $0.67
Sep2003 $0.47

Recommended Reading:

Other ModernGraham posts about the company

Walt Disney Co Valuation – February 2018 $DIS
Walt Disney Co Valuation – March 2017 $DIS
Walt Disney Co Valuation – December 2015 Update $DIS
26 Companies in the Spotlight This Week – 11/22/14
The Walt Disney Company Annual Valuation – 2014 $DIS

Other ModernGraham posts about related companies

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
Graham Holdings Co Valuation – July 2018 $GHC
News Corp Valuation – June 2018 $NWS
Netflix Inc Valuation – June 2018 $NFLX

Disclaimer:

The author held a long position in DIS but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  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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