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Cabot Oil & Gas Corp Valuation – March 2019 #COG

Company Profile (excerpt from Reuters): Cabot Oil & Gas Corporation, incorporated on December 14, 1989, is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company operates in the segment of natural gas and oil development, exploitation, exploration and production, in the continental United States. Its assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. As of December 31, 2016, the Company’s exploration, development and production operations were primarily concentrated in two unconventional plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COG – 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 $10,990,606,932 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.90 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 240.83% Pass
6. Moderate PEmg Ratio PEmg < 20 36.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.39 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 1.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.77 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.71
MG Growth Estimate 15.00%
MG Value $27.26
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $10.27
MG Value based on 0% Growth $6.02
Market Implied Growth Rate 14.08%
Current Price $25.96
% of Intrinsic Value 95.24%

Cabot Oil & Gas Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.17 in 2015 to an estimated $0.71 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 14.08% 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 Cabot Oil & Gas Corporation revealed the company was trading above its Graham Number of $12.44. The company pays a dividend of $0.25 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 36.67, which was below the industry average of 58.42, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.61.

Cabot Oil & Gas 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) -$3.61
Graham Number $12.44
PEmg 36.67
Current Ratio 1.90
PB Ratio 5.39
Current Dividend $0.25
Dividend Yield 0.96%
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 12/1/2018
Total Current Assets $544,545,000
Total Current Liabilities $287,264,000
Long-Term Debt $1,226,104,000
Total Assets $4,198,829,000
Intangible Assets $0
Total Liabilities $2,110,670,000
Shares Outstanding (Diluted Average) 433,333,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.42
Dec2018 $1.24
Dec2017 $0.22
Dec2016 -$0.91
Dec2015 -$0.28
Dec2014 $0.25
Dec2013 $0.66
Dec2012 $0.31
Dec2011 $0.29
Dec2010 $0.25
Dec2009 $0.36
Dec2008 $0.52
Dec2007 $0.43
Dec2006 $0.81
Dec2005 $0.37
Dec2004 $0.15
Dec2003 $0.05
Dec2002 $0.03
Dec2001 $0.13
Dec2000 $0.09
Dec1999 $0.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.71
Dec2018 $0.27
Dec2017 -$0.15
Dec2016 -$0.22
Dec2015 $0.17
Dec2014 $0.38
Dec2013 $0.42
Dec2012 $0.31
Dec2011 $0.33
Dec2010 $0.39
Dec2009 $0.48
Dec2008 $0.51
Dec2007 $0.46
Dec2006 $0.41
Dec2005 $0.19
Dec2004 $0.09
Dec2003 $0.06

Recommended Reading:

Other ModernGraham posts about the company

Cabot Oil & Gas Corp Valuation – June 2018 $COG
Cabot Oil & Gas Corp Valuation – March 2017 $COG
Cabot Oil & Gas Corp Valuation – December 2015 Update $COG
5 Speculative and Overvalued Companies to Avoid – December 2014
32 Companies in the Spotlight This Week – 12/6/14

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Concho Resources Inc Valuation – March 2019 #CXO
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Kinder Morgan Inc Valuation – February 2019 $KMI
National Oilwell Varco Inc Valuation – February 2019 $NOV
Diamondback Energy Inc Valuation – February 2019 $FANG
TechnipFMC PLC Valuation – February 2019 $FTI
Marathon Petroleum Corp Valuation – February 2019 $MPC

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.

Cognizant Technology Solutions Corp Valuation – January 2019 $CTSH

Company Profile (excerpt from Reuters): Cognizant Technology Solutions Corporation, incorporated on April 6, 1988, is a professional services company. The Company operates through four segments: Financial Services, Healthcare, Manufacturing/Retail/Logistics, and Other. The Company’s services include consulting and technology services and outsourcing services. Its consulting and technology services include business, process, operations and technology consulting, application development and systems integrations, application testing, enterprise information management and software solutions and related services. Its outsourcing services include application maintenance, IT infrastructure services and business process services. The Company deploys a range of commercial and delivery models, including managed services, fixed bid, output and outcome based pricing and platforms to address the various needs of its customers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTSH – 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 $39,333,372,216 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.24 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 146.00% Pass
6. Moderate PEmg Ratio PEmg < 20 23.65 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.59 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 3.24 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.10 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 $2.87
MG Growth Estimate 7.26%
MG Value $66.09
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $41.63
MG Value based on 0% Growth $24.41
Market Implied Growth Rate 7.58%
Current Price $67.92
% of Intrinsic Value 102.77%

Cognizant Technology Solutions Corp 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.94 in 2014 to an estimated $2.87 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 7.58% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Cognizant Technology Solutions Corp revealed the company was trading above its Graham Number of $37.96. The company pays a dividend of $0.45 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 23.65, which was below the industry average of 44.74, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $7.64.

Cognizant Technology Solutions 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) $7.64
Graham Number $37.96
PEmg 23.65
Current Ratio 3.24
PB Ratio 3.59
Current Dividend $0.45
Dividend Yield 0.66%
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 9/1/2018
Total Current Assets $8,727,000,000
Total Current Liabilities $2,693,000,000
Long-Term Debt $624,000,000
Total Assets $15,274,000,000
Intangible Assets $4,058,000,000
Total Liabilities $4,296,000,000
Shares Outstanding (Diluted Average) 580,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.53
Dec2017 $2.53
Dec2016 $2.55
Dec2015 $2.65
Dec2014 $2.35
Dec2013 $2.02
Dec2012 $1.72
Dec2011 $1.43
Dec2010 $1.19
Dec2009 $0.89
Dec2008 $0.72
Dec2007 $0.58
Dec2006 $0.39
Dec2005 $0.28
Dec2004 $0.18
Dec2003 $0.11
Dec2002 $0.07
Dec2001 $0.05
Dec2000 $0.04
Dec1999 $0.02
Dec1998 $0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.87
Dec2017 $2.50
Dec2016 $2.41
Dec2015 $2.24
Dec2014 $1.94
Dec2013 $1.63
Dec2012 $1.36
Dec2011 $1.10
Dec2010 $0.88
Dec2009 $0.67
Dec2008 $0.52
Dec2007 $0.38
Dec2006 $0.26
Dec2005 $0.17
Dec2004 $0.11
Dec2003 $0.07
Dec2002 $0.05

Recommended Reading:

Other ModernGraham posts about the company

Cognizant Technology Solutions Corp – March 2018 $CTSH
12 Best Stocks For Value Investors This Week – 7/1/16
Cognizant Technology Solutions Corp Valuation – July 2016 $CTSH
18 Best Stocks For Value Investors This Week – 1/30/16
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH

Other ModernGraham posts about related companies

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Acxiom Corp Valuation – July 2018 $ACXM
Infosys Ltd Valuation – June 2018 $INFY
Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS

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.

Cognex Corp Valuation – July 2018 $CGNX

Company Profile (excerpt from Reuters): Cognex Corporation (Cognex), incorporated on January 7, 1981, is a provider of machine vision products that capture and analyze visual information in order to automate tasks, primarily in manufacturing processes, where vision is required. The Company operates through the machine vision technology segment. The Company’s machine vision products are used to automate the manufacture and tracking of discrete items, such as mobile phones, aspirin bottles and automobile tires, by locating, identifying, inspecting and measuring them during the manufacturing or distribution process. The Company’s products include vision software, vision systems, vision sensors and identification (ID) products. Its products range from vision sensors that are integrated, to personal computer (PC)-based systems for users. Its products also have a range of physical forms, depending upon the user’s need. Cognex sells its products through a direct sales force, as well as through a global network of integration and distribution partners.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CGNX – July 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 $7,736,027,540 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 5.93 Pass
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 288.16% Pass
6. Moderate PEmg Ratio PEmg < 20 45.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.47 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 5.93 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $0.99
MG Growth Estimate 14.96%
MG Value $38.01
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $14.35
MG Value based on 0% Growth $8.41
Market Implied Growth Rate 18.40%
Current Price $44.81
% of Intrinsic Value 117.89%

Cognex Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability 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 $0.5 in 2014 to an estimated $0.99 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.4% 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 Cognex Corporation revealed the company was trading above its Graham Number of $12.5. The company pays a dividend of $0.17 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 45.29, which was below the industry average of 53.59, 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 $2.66.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.66
Graham Number $12.50
PEmg 45.29
Current Ratio 5.93
PB Ratio 7.47
Current Dividend $0.17
Dividend Yield 0.37%
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 3/1/2018
Total Current Assets $670,549,000
Total Current Liabilities $113,018,000
Long-Term Debt $0
Total Assets $1,268,915,000
Intangible Assets $125,628,000
Total Liabilities $191,816,000
Shares Outstanding (Diluted Average) 179,641,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.10
Dec2017 $0.99
Dec2016 $0.86
Dec2015 $1.06
Dec2014 $0.68
Dec2013 $0.42
Dec2012 $0.39
Dec2011 $0.41
Dec2010 $0.38
Dec2009 -$0.03
Dec2008 $0.17
Dec2007 $0.15
Dec2006 $0.21
Dec2005 $0.19
Dec2004 $0.20
Dec2003 $0.09
Dec2002 -$0.04
Dec2001 -$0.06
Dec2000 $0.37
Dec1999 $0.17
Dec1998 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.99
Dec2017 $0.89
Dec2016 $0.79
Dec2015 $0.70
Dec2014 $0.50
Dec2013 $0.37
Dec2012 $0.32
Dec2011 $0.26
Dec2010 $0.19
Dec2009 $0.11
Dec2008 $0.18
Dec2007 $0.18
Dec2006 $0.17
Dec2005 $0.12
Dec2004 $0.10
Dec2003 $0.07
Dec2002 $0.08

Recommended Reading:

Other ModernGraham posts about the company

9 Best Stocks for Value Investors This Week – 12/17/16
Cognex Corporation Valuation – Initial Coverage $CGNX

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Arrow Electronics Inc Valuation – June 2018 $ARW
Lam Research Corp Valuation – June 2018 $LRCX
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Garmin Ltd Valuation – June 2018 $GRMN

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.

Cabot Oil & Gas Corp Valuation – June 2018 $COG

Company Profile (excerpt from Reuters): Cabot Oil & Gas Corporation, incorporated on December 14, 1989, is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company operates in the segment of natural gas and oil development, exploitation, exploration and production, in the continental United States. Its assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. As of December 31, 2016, the Company’s exploration, development and production operations were primarily concentrated in two unconventional plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States.

COG Chart

COG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COG – June 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,650,594,464 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.42 Pass
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 -73.03% Fail
6. Moderate PEmg Ratio PEmg < 20 142.11 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.52 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 2.42 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.68 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 $0.17
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $2.41
MG Value based on 0% Growth $1.41
Market Implied Growth Rate 66.80%
Current Price $23.59
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.38 in 2014 to an estimated $0.17 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 66.8% 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 Cabot Oil & Gas Corporation revealed the company was trading above its Graham Number of $10.71. The company pays a dividend of $0.17 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 142.11, which was above the industry average of 87.76. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-1.94.

Cabot Oil & Gas Corporation 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) -$1.94
Graham Number $10.71
PEmg 142.11
Current Ratio 2.42
PB Ratio 4.52
Current Dividend $0.17
Dividend Yield 0.72%
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 3/1/2018
Total Current Assets $1,236,118,000
Total Current Liabilities $510,491,000
Long-Term Debt $1,218,231,000
Total Assets $4,538,401,000
Intangible Assets $0
Total Liabilities $2,131,885,000
Shares Outstanding (Diluted Average) 461,549,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.93
Dec2017 $0.22
Dec2016 -$0.91
Dec2015 -$0.28
Dec2014 $0.25
Dec2013 $0.66
Dec2012 $0.31
Dec2011 $0.29
Dec2010 $0.25
Dec2009 $0.36
Dec2008 $0.52
Dec2007 $0.43
Dec2006 $0.81
Dec2005 $0.37
Dec2004 $0.22
Dec2003 $0.05
Dec2002 $0.04
Dec2001 $0.13
Dec2000 $0.09
Dec1999 $0.02
Dec1998 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.17
Dec2017 -$0.15
Dec2016 -$0.22
Dec2015 $0.17
Dec2014 $0.38
Dec2013 $0.42
Dec2012 $0.31
Dec2011 $0.33
Dec2010 $0.39
Dec2009 $0.48
Dec2008 $0.52
Dec2007 $0.47
Dec2006 $0.43
Dec2005 $0.21
Dec2004 $0.12
Dec2003 $0.07
Dec2002 $0.07

Recommended Reading:

Other ModernGraham posts about the company

Cabot Oil & Gas Corp Valuation – March 2017 $COG
Cabot Oil & Gas Corp Valuation – December 2015 Update $COG
5 Speculative and Overvalued Companies to Avoid – December 2014
32 Companies in the Spotlight This Week – 12/6/14
Cabot Oil & Gas Corporation Annual Valuation – 2014 $COG

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Halliburton Co Valuation – May 2018 $HAL
National Oilwell Varco Inc Valuation – May 2018 $NOV
Newfield Exploration Co Valuation – May 2018 $NFX
Kinder Morgan Inc Valuation – May 2018 $KMI
Range Resources Corp Valuation – May 2018 $RRC
Phillips 66 Valuation – April 2018 $PSX

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.

Cognizant Technology Solutions Corp – March 2018 $CTSH

Company Profile (excerpt from Reuters): Cognizant Technology Solutions Corporation, incorporated on April 6, 1988, is a professional services company. The Company operates through four segments: Financial Services, Healthcare, Manufacturing/Retail/Logistics, and Other. The Company’s services include consulting and technology services and outsourcing services. Its consulting and technology services include business, process, operations and technology consulting, application development and systems integrations, application testing, enterprise information management and software solutions and related services. Its outsourcing services include application maintenance, IT infrastructure services and business process services. The Company deploys a range of commercial and delivery models, including managed services, fixed bid, output and outcome based pricing and platforms to address the various needs of its customers.

CTSH Chart

CTSH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTSH – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $49,284,578,017 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.21 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 168.00% Pass
6. Moderate PEmg Ratio PEmg < 20 26.79 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.65 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 3.21 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.11 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 $3.13
MG Growth Estimate 9.25%
MG Value $84.44
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $45.36
MG Value based on 0% Growth $26.59
Market Implied Growth Rate 9.15%
Current Price $83.81
% of Intrinsic Value 99.25%

Cognizant Technology Solutions Corp 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.94 in 2014 to an estimated $3.13 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 9.15% 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 Cognizant Technology Solutions Corp revealed the company was trading above its Graham Number of $41.9. The company pays a dividend of $0.45 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 26.79, which was below the industry average of 43.34, 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 $7.7.

Cognizant Technology Solutions 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) $7.70
Graham Number $41.90
PEmg 26.79
Current Ratio 3.21
PB Ratio 4.65
Current Dividend $0.45
Dividend Yield 0.54%
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 12/1/2017
Total Current Assets $9,111,000,000
Total Current Liabilities $2,839,000,000
Long-Term Debt $698,000,000
Total Assets $15,221,000,000
Intangible Assets $3,685,000,000
Total Liabilities $4,552,000,000
Shares Outstanding (Diluted Average) 592,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.30
Dec2017 $2.53
Dec2016 $2.55
Dec2015 $2.65
Dec2014 $2.35
Dec2013 $2.02
Dec2012 $1.72
Dec2011 $1.43
Dec2010 $1.19
Dec2009 $0.89
Dec2008 $0.72
Dec2007 $0.58
Dec2006 $0.39
Dec2005 $0.28
Dec2004 $0.18
Dec2003 $0.11
Dec2002 $0.07
Dec2001 $0.05
Dec2000 $0.04
Dec1999 $0.02
Dec1998 $0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.13
Dec2017 $2.50
Dec2016 $2.41
Dec2015 $2.24
Dec2014 $1.94
Dec2013 $1.63
Dec2012 $1.36
Dec2011 $1.10
Dec2010 $0.88
Dec2009 $0.67
Dec2008 $0.52
Dec2007 $0.38
Dec2006 $0.26
Dec2005 $0.17
Dec2004 $0.11
Dec2003 $0.07
Dec2002 $0.05

Recommended Reading:

Other ModernGraham posts about the company

18 Best Stocks For Value Investors This Week – 1/30/16
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
8 Best Stocks For Value Investors This Week – 10/13/15
Cognizant Technology Solutions Corp Analysis – October 2015 Update $CTSH
The 20 Best Stocks For Value Investors This Week – 7/25/15

Other ModernGraham posts about related companies

International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
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LogMeIn Inc Valuation – Initial Coverage $LOGM
Sykes Enterprises Inc Valuation – Initial Coverage $SYKE
Convergys Corp Valuation – Initial Coverage $CVG
International Business Machines Corp Valuation – March 2017 $IBM
Verisk Analytics Inc Valuation – Initial Coverage $VRSK

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.

Cabot Oil & Gas Corp Valuation – March 2017 $COG

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

Company Profile (obtained from Google Finance): Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company operates in the segment of natural gas and oil development, exploitation, exploration and production, in the continental United States. Its assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. As of December 31, 2016, its exploration, development and production operations were primarily concentrated in two unconventional plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States. Its Marcellus Shale properties are principally located in Susquehanna County, Pennsylvania. Its properties in the Eagle Ford Shale are principally located in Atascosa, Frio and La Salle Counties, Texas.

COG Chart

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ModernGraham Valuation of COG – March 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,581,334,679 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.78 Pass
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 -193.75% Fail
6. Moderate PEmg Ratio PEmg < 20 -127.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.96 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 2.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.32 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 -$0.17
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$2.53
MG Value based on 0% Growth -$1.48
Market Implied Growth Rate -68.00%
Current Price $22.27
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.42 in 2013 to an estimated $-0.17 for 2017. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cabot Oil & Gas Corporation revealed the company was trading above its Graham Number of $4.17. The company pays a dividend of $0.08 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was -127.5, which was below the industry average of 69.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.03.

Cabot Oil & Gas 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) -$4.03
Graham Number $4.17
PEmg -127.50
Current Ratio 2.78
PB Ratio 3.96
Current Dividend $0.08
Dividend Yield 0.36%
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 12/1/2016
Total Current Assets $715,881,000
Total Current Liabilities $257,812,000
Long-Term Debt $1,520,530,000
Total Assets $5,122,569,000
Intangible Assets $0
Total Liabilities $2,554,902,000
Shares Outstanding (Diluted Average) 456,847,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.14
Dec2016 -$0.91
Dec2015 -$0.28
Dec2014 $0.25
Dec2013 $0.66
Dec2012 $0.31
Dec2011 $0.29
Dec2010 $0.25
Dec2009 $0.36
Dec2008 $0.52
Dec2007 $0.43
Dec2006 $0.81
Dec2005 $0.37
Dec2004 $0.22
Dec2003 $0.05
Dec2002 $0.04
Dec2001 $0.13
Dec2000 $0.09
Dec1999 $0.02
Dec1998 $0.01
Dec1997 $0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.17
Dec2016 -$0.22
Dec2015 $0.17
Dec2014 $0.38
Dec2013 $0.42
Dec2012 $0.31
Dec2011 $0.33
Dec2010 $0.39
Dec2009 $0.48
Dec2008 $0.52
Dec2007 $0.47
Dec2006 $0.43
Dec2005 $0.21
Dec2004 $0.12
Dec2003 $0.07
Dec2002 $0.07
Dec2001 $0.08

Recommended Reading:

Other ModernGraham posts about the company

Cabot Oil & Gas Corp Valuation – December 2015 Update $COG
5 Speculative and Overvalued Companies to Avoid – December 2014
32 Companies in the Spotlight This Week – 12/6/14
Cabot Oil & Gas Corporation Annual Valuation – 2014 $COG

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CST Brands Inc Valuation – Initial Coverage $CST
Valero Energy Corp Valuation – February 2017 $VLO
Tidewater Inc Valuation – February 2017 $TDW
Occidental Petroleum Corp Valuation – February 2017 $OXY
Carrizo Oil & Gas Inc Valuation – Initial Coverage $CRZO
Denbury Resources Inc Valuation – February 2017 $DNR

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.

Cognex Corporation Valuation – Initial Coverage $CGNX

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 – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cognex Corporation (CGNX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cognex Corporation (Cognex) is a provider of machine vision products that capture and analyze visual information in order to automate tasks, primarily in manufacturing processes, where vision is required. The Company’s machine vision products are used to automate the manufacture and tracking of discrete items, such as mobile phones, aspirin bottles and automobile tires, by locating, identifying, inspecting and measuring them during the manufacturing or distribution process. The Company’s products include vision software, vision systems, vision sensors and ID products. Its products range from vision sensors that are integrated, to personal computer (PC)-based systems for users. Its products have a range of physical forms, depending upon the user’s need. Cognex sells its products through a direct sales force, as well as through a global network of integration and distribution partners. Its service offerings include maintenance and support, consulting and training services.

CGNX Chart

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ModernGraham Valuation of CGNX December 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,407,132,121 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.68 Pass
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 774.78% Pass
6. Moderate PEmg Ratio PEmg < 20 42.28 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.93 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 7.68 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $1.52
MG Growth Estimate 15.00%
MG Value $58.37
Opinion Fairly Valued
MG Grade C
MG Value based on 3% Growth $21.98
MG Value based on 0% Growth $12.89
Market Implied Growth Rate 16.89%
Current Price $64.09
% of Intrinsic Value 109.81%

Cognex Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.64 in 2012 to an estimated $1.52 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 16.89% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Cognex Corporation revealed the company was trading above its Graham Number of $19.54. The company pays a dividend of $0.29 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 42.28, which was above the industry average of 22.64. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.21.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $5.21
Graham Number $19.54
PEmg 42.28
Current Ratio 7.68
PB Ratio 5.93
Current Dividend $0.29
Dividend Yield 0.45%
Number of Consecutive Years of Dividend Growth 2

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $530,828,000
Total Current Liabilities $69,074,000
Long-Term Debt $0
Total Assets $1,020,087,000
Intangible Assets $87,547,000
Total Liabilities $76,139,000
Shares Outstanding (Diluted Average) 87,346,000

Earnings Per Share History

Next Fiscal Year Estimate $1.54
Dec2015 $2.13
Dec2014 $1.36
Dec2013 $0.83
Dec2012 $0.78
Dec2011 $0.82
Dec2010 $0.76
Dec2009 -$0.06
Dec2008 $0.33
Dec2007 $0.31
Dec2006 $0.43
Dec2005 $0.37
Dec2004 $0.40
Dec2003 $0.18
Dec2002 -$0.07
Dec2001 -$0.13
Dec2000 $0.75
Dec1999 $0.35
Dec1998 $0.24
Dec1997 $0.46
Dec1996 $0.35

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.52
Dec2015 $1.40
Dec2014 $0.99
Dec2013 $0.75
Dec2012 $0.64
Dec2011 $0.53
Dec2010 $0.37
Dec2009 $0.21
Dec2008 $0.35
Dec2007 $0.35
Dec2006 $0.34
Dec2005 $0.25
Dec2004 $0.20
Dec2003 $0.14
Dec2002 $0.15
Dec2001 $0.29
Dec2000 $0.47

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

Ingram Micro Inc Valuation – Initial Coverage $IM
Sanmina Corp Valuation – Initial Coverage $SANM
Qorvo Inc Valuation – December 2016 Update $QRVO
IIVI Inc Valuation – Initial Coverage $IIVI
CEVA Inc Valuation – Initial Coverage $CEVA
NetApp Inc Valuation – August 2016 $NTAP
Applied Materials Inc Valuation – August 2016 $AMAT
Skyworks Solutions Inc Valuation – August 2016 $SWKS
Garmin Limited Valuation – August 2016 $GRMN
Analog Devices Inc Valuation – August 2016 $ADI

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.

Cognizant Technology Solutions Corp Valuation – July 2016 $CTSH

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

Company Profile (obtained from Google Finance): Cognizant Technology Solutions Corporation is a provider of information technology (IT), consulting and business process services. The Company operates through four segments: Financial Services, which includes customers providing banking/transaction processing, capital markets and insurance services; Healthcare, which includes healthcare providers and payers, as well as life sciences customers, including pharmaceutical, biotech and medical device companies; Manufacturing, Retail and Logistics, which includes manufacturers, retailers, travel and other hospitality customers, as well as customers providing logistics services, and Other, which includes communications, manufacturing/retail/logistics, and high technology. The Company’s competencies include business, process, operations and IT consulting, application development and systems integration, enterprise information management, application testing, application maintenance and IT infrastructure services.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CTSH – July 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $35,354,992,291 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.69 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 278.95% Pass
6. Moderate PEmg Ratio PEmg < 20 21.57 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.64 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.16 Pass
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

CTSH value chart July 2016

EPSmg $2.65
MG Growth Estimate 14.33%
MG Value $98.59
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $38.47
MG Value based on 0% Growth $22.55
Market Implied Growth Rate 6.54%
Current Price $57.24
% of Intrinsic Value 58.06%

Cognizant Technology Solutions Corp 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 lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.36 in 2012 to an estimated $2.65 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.54% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Cognizant Technology Solutions Corp performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

CTSH charts July 2016

Net Current Asset Value (NCAV) $7.27
Graham Number $34.21
PEmg 21.57
Current Ratio 3.69
PB Ratio 3.64
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 3/1/2016
Total Current Assets $7,570,900,000
Total Current Liabilities $2,050,400,000
Long-Term Debt $858,400,000
Total Assets $12,735,900,000
Intangible Assets $3,324,100,000
Total Liabilities $3,123,600,000
Shares Outstanding (Diluted Average) 611,800,000

Earnings Per Share History

Next Fiscal Year Estimate $3.28
Dec2015 $2.65
Dec2014 $2.35
Dec2013 $2.02
Dec2012 $1.72
Dec2011 $1.43
Dec2010 $1.19
Dec2009 $0.89
Dec2008 $0.72
Dec2007 $0.58
Dec2006 $0.39
Dec2005 $0.28
Dec2004 $0.18
Dec2003 $0.11
Dec2002 $0.07
Dec2001 $0.05
Dec2000 $0.04
Dec1999 $0.02
Dec1998 $0.02

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.65
Dec2015 $2.24
Dec2014 $1.93
Dec2013 $1.63
Dec2012 $1.36
Dec2011 $1.10
Dec2010 $0.88
Dec2009 $0.67
Dec2008 $0.52
Dec2007 $0.38
Dec2006 $0.26
Dec2005 $0.17
Dec2004 $0.11
Dec2003 $0.07
Dec2002 $0.05
Dec2001 $0.03
Dec2000 $0.02

Recommended Reading:

Other ModernGraham posts about the company

18 Best Stocks For Value Investors This Week – 1/30/16
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
8 Best Stocks For Value Investors This Week – 10/13/15
Cognizant Technology Solutions Corp Analysis – October 2015 Update $CTSH
8 Best Stocks For Value Investors This Week – 10/13/15

Other ModernGraham posts about related companies

Total System Services Inc Valuation – May 2016 $TSS
Qualcomm Inc Valuation – February 2016 $QCOM
Motorola Solutions Inc Valuation – February 2016 Update $MSI
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
Akamai Technologies Inc Valuation – January 2016 $AKAM
Infosys Ltd Valuation – January 2016 Update $INFY
Motorola Solutions Inc Valuation – February 2016 Update $MSI
Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH
Akamai Technologies Inc Valuation – January 2016 $AKAM
Infosys Ltd Valuation – January 2016 Update $INFY

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.

Cognizant Technology Solutions Corp Valuation – January 2016 Update $CTSH

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 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cognizant Technology Solutions Corp (CTSH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cognizant Technology Solutions Corporation is a provider of information technology (IT), consulting and business process services. The Company operates in four segments: Financial Services segment, which include banking and insurance; Healthcare segment, which includes healthcare and life sciences, and Manufacturing/Retail/Logistics segment, which includes manufacturing and logistics; retail, travel and hospitality, and consumer goods and Other segment, which includes Communications, Manufacturing/Retail/Logistics, and High Technology. The Companies competencies include business, process, operations and IT consulting, application development and systems integration, enterprise information management (EIM), application testing, application maintenance, IT infrastructure services (IT IS) and business process services (BPS). It provides a range of consulting, information technology and outsourcing services, including consulting and technology services, and outsourcing services.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CTSH – January 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,055,992,602 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.40 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 318.89% Pass
6. Moderate PEmg Ratio PEmg < 20 27.28 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.26 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.40 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.18 Pass
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

CTSH value Chart January 2016

EPSmg $2.25
MG Growth Estimate 15.00%
MG Value $86.56
Opinion Undervalued
MG Value based on 3% Growth $32.60
MG Value based on 0% Growth $19.11
Market Implied Growth Rate 9.39%
Current Price $61.34
% of Intrinsic Value 70.86%

Cognizant Technology Solutions Corp qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the lack of dividends along with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.10 in 2011 to an estimated $2.25 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.39% annual earnings loss over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

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

Stage 3: Information for Further Research

CTSH Charts January 2016

Net Current Asset Value (NCAV) $6.20
Graham Number $29.59
PEmg 27.28
Current Ratio 3.40
PB Ratio 4.26
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 Sep2015
Total Current Assets $7,237,900,000
Total Current Liabilities $2,128,400,000
Long-Term Debt $900,000,000
Total Assets $12,267,600,000
Intangible Assets $3,285,000,000
Total Liabilities $3,440,600,000
Shares Outstanding (Diluted Average) 612,700,000

Earnings Per Share History

Next Fiscal Year Estimate $2.68
Dec2014 $2.35
Dec2013 $2.02
Dec2012 $1.72
Dec2011 $1.43
Dec2010 $1.19
Dec2009 $0.89
Dec2008 $0.72
Dec2007 $0.58
Dec2006 $0.39
Dec2005 $0.28
Dec2004 $0.18
Dec2003 $0.11
Dec2002 $0.07
Dec2001 $0.05
Dec2000 $0.04
Dec1999 $0.02
Dec1998 $0.03

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.25
Dec2014 $1.94
Dec2013 $1.63
Dec2012 $1.36
Dec2011 $1.10
Dec2010 $0.88
Dec2009 $0.67
Dec2008 $0.52
Dec2007 $0.38
Dec2006 $0.26
Dec2005 $0.17
Dec2004 $0.11
Dec2003 $0.07
Dec2002 $0.05
Dec2001 $0.03
Dec2000 $0.02
Dec1999 $0.02

Recommended Reading:

Other ModernGraham posts about the company

8 Best Stocks For Value Investors This Week – 10/13/15
The 20 Best Stocks For Value Investors This Week – 7/25/15
Cognizant Technology Solutions Corp Analysis – July 2015 Update $CTSH
27 Companies in the Spotlight This Week – 4/4/15
Cognizant Technology Solutions Corp Quarterly Valuation – March 2015 $CTSH

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Cognizant Technology Solutions Corp Analysis – October 2015 Update $CTSH
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Teradata Corporation Analysis – September 2015 Update $TDC
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Disclaimer:

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

Cabot Oil & Gas Corp Valuation – December 2015 Update $COG

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 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cabot Oil & Gas Corp (COG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company’s exploration, development and production operations are primarily concentrated in two plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company’s Marcellus Shale properties are principally located in Susquehanna County and to a lesser extent Wyoming County, Pennsylvania. The Company’s properties in the Eagle Ford Shale are principally located in Atascosa, Frio and La Salle Counties, Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States, including the Utica Shale in Pennsylvania; the Cotton Valley, Haynesville, Bossier, and James Lime formations in east Texas, and the Devonian Shale, Big Lime, Weir and Berea in West Virginia.

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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. Here is a free sample valuation pdf, and 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 COG – December 2015

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 $7,193,063,900 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.81 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 -55.16% Fail
6. Moderate PEmg Ratio PEmg < 20 80.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.45 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.81 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -40.21 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

COG value Chart December 2015

EPSmg $0.22
MG Growth Estimate -3.97%
MG Value $0.12
Opinion Overvalued
MG Value based on 3% Growth $3.18
MG Value based on 0% Growth $1.86
Market Implied Growth Rate 36.12%
Current Price $17.71
% of Intrinsic Value 14525.93%

Cabot Oil & Gas Corp does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned by the low current ratio, the insufficient earnings growth or stability over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor has concerns with the level of debt in relation to the current assets as well as the insufficient earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $0.30 in 2011 to an estimated $0.22 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 36.12% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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

Stage 3: Information for Further Research

COG Charts December 2015

Net Current Asset Value (NCAV) -$7.61
Graham Number #NUM!
PEmg 80.74
Current Ratio 0.81
PB Ratio 3.45
Dividend Yield 0.45%
Number of Consecutive Years of Dividend Growth 4

 

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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 Sep15
Total Current Assets $215,421,000
Total Current Liabilities $265,585,000
Long-Term Debt $2,017,000,000
Total Assets $5,484,672,000
Intangible Assets $0
Total Liabilities $3,362,935,000
Shares Outstanding (Diluted Average) 413,846,000

Earnings Per Share History

Next Fiscal Year Estimate -$0.12
Dec14 $0.25
Dec13 $0.66
Dec12 $0.31
Dec11 $0.29
Dec10 $0.12
Dec09 $0.36
Dec08 $0.52
Dec07 $0.43
Dec06 $0.81
Dec05 $0.37
Dec04 $0.22
Dec03 $0.05
Dec02 $0.04
Dec01 $0.13
Dec00 $0.09
Dec99 $0.02
Dec98 $0.01
Dec97 $0.08
Dec96 $0.06
Dec95 -$0.34

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.22
Dec14 $0.37
Dec13 $0.40
Dec12 $0.29
Dec11 $0.30
Dec10 $0.35
Dec09 $0.48
Dec08 $0.52
Dec07 $0.47
Dec06 $0.43
Dec05 $0.21
Dec04 $0.12
Dec03 $0.07
Dec02 $0.07
Dec01 $0.08
Dec00 $0.05
Dec99 $0.01

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – December 2014
32 Companies in the Spotlight This Week – 12/6/14
Cabot Oil & Gas Corporation Annual Valuation – 2014 $COG

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Disclaimer:

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

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