Copart Inc Valuation – April 2019 #CPRT

Company Profile (excerpt from Reuters): Copart, Inc. (Copart), incorporated on January 6, 2012, is a provider of online auctions and vehicle remarketing services in the United States, Canada, the United Kingdom, the United Arab Emirates, Oman, Bahrain, Brazil, Ireland, Spain and India. The Company also provides vehicle remarketing services in Germany. The Company operates through two segments: United States and International. The Company provides vehicle sellers with a range of services to process and sell vehicles primarily over the Internet through its virtual bidding third generation Internet auction-style sales technology (VB3). It sells vehicles primarily to insurance companies, such as banks and financial institutions, charities, car dealerships, municipalities, fleet operators and vehicle rental companies. The Company sells the vehicles principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers and exporters and, at certain locations, to the general public.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CPRT – April 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 $14,418,055,149 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 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 227.38% Pass
6. Moderate PEmg Ratio PEmg < 20 37.14 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.41 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 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.55 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 $1.70
MG Growth Estimate 15.00%
MG Value $65.48
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $24.66
MG Value based on 0% Growth $14.46
Market Implied Growth Rate 14.32%
Current Price $63.17
% of Intrinsic Value 96.48%

Copart, 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 net current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.73 in 2015 to an estimated $1.7 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 14.32% 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 Copart, Inc. revealed the company was trading above its Graham Number of $17.91. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 37.14, which was above the industry average of 22.44. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.87.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.87
Graham Number $17.91
PEmg 37.14
Current Ratio 1.69
PB Ratio 10.41
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 1/1/2019
Total Current Assets $628,466,000
Total Current Liabilities $372,033,000
Long-Term Debt $398,740,000
Total Assets $2,296,905,000
Intangible Assets $398,310,000
Total Liabilities $836,952,000
Shares Outstanding (Diluted Average) 240,660,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.11
Jul2018 $1.73
Jul2017 $1.66
Jul2016 $1.11
Jul2015 $0.84
Jul2014 $0.68
Jul2013 $0.70
Jul2012 $0.70
Jul2011 $0.54
Jul2010 $0.45
Jul2009 $0.42
Jul2008 $0.44
Jul2007 $0.37
Jul2006 $0.26
Jul2005 $0.28
Jul2004 $0.22
Jul2003 $0.16
Jul2002 $0.16
Jul2001 $0.13
Jul2000 $0.09
Jul1999 $0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.70
Jul2018 $1.40
Jul2017 $1.15
Jul2016 $0.87
Jul2015 $0.73
Jul2014 $0.65
Jul2013 $0.61
Jul2012 $0.55
Jul2011 $0.46
Jul2010 $0.41
Jul2009 $0.38
Jul2008 $0.35
Jul2007 $0.29
Jul2006 $0.23
Jul2005 $0.21
Jul2004 $0.17
Jul2003 $0.14

Recommended Reading:

Other ModernGraham posts about the company

Copart Inc Valuation – August 2018 $CPRT
14 Best Stocks for Value Investors This Week – 2/11/17
Copart Inc Valuation – Initial Coverage $CPRT

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BorgWarner Inc Valuation – February 2019 $BWA
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Ford Motor Co Valuation – February 2019 $F
General Motors Co Valuation – February 2019 $GM
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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.

ConocoPhillips Valuation – February 2019 $COP

Company Profile (excerpt from Reuters): ConocoPhillips, incorporated on November 16, 2001, is an independent exploration and production (E&P) company. The Company explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG) and natural gas liquids. The Company operates through six segments: Alaska, Lower 48, Canada, Europe and North Africa, Asia Pacific and Middle East, and Other International. As of December 31, 2016, its operations were in the United States, Norway, the United Kingdom, Canada, Australia, Timor-Leste, Indonesia, China, Malaysia, Qatar and Libya. Its portfolio includes North American unconventional assets and oil sands assets in Canada; conventional assets in North America, Europe, Asia and Australia; LNG developments, and an inventory of conventional and unconventional exploration prospects. The Company’s subsidiaries include ConocoPhillips Company, ConocoPhillips Canada Funding Company I and Burlington Resources, Inc.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COP – 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 $78,819,282,328 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.99 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 -98.62% Fail
6. Moderate PEmg Ratio PEmg < 20 167.12 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.53 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.04 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 $0.41
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $6.01
MG Value based on 0% Growth $3.52
Market Implied Growth Rate 79.31%
Current Price $69.30
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $6.85 in 2014 to an estimated $0.41 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 79.31% 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 ConocoPhillips revealed the company was trading above its Graham Number of $47.64. The company pays a dividend of $1.06 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 167.12, which was above the industry average of 43.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.26.

ConocoPhillips 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) -$20.26
Graham Number $47.64
PEmg 167.12
Current Ratio 1.99
PB Ratio 2.53
Current Dividend $1.06
Dividend Yield 1.53%
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 $14,723,000,000
Total Current Liabilities $7,401,000,000
Long-Term Debt $14,902,000,000
Total Assets $70,556,000,000
Intangible Assets $0
Total Liabilities $38,477,000,000
Shares Outstanding (Diluted Average) 1,172,694,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.88
Dec2017 -$0.70
Dec2016 -$2.91
Dec2015 -$3.58
Dec2014 $5.51
Dec2013 $7.38
Dec2012 $6.72
Dec2011 $8.97
Dec2010 $7.62
Dec2009 $2.94
Dec2008 -$10.73
Dec2007 $7.22
Dec2006 $9.66
Dec2005 $9.55
Dec2004 $5.80
Dec2003 $3.46
Dec2002 -$0.31
Dec2001 $2.82
Dec2000 $3.63
Dec1999 $1.20
Dec1998 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.41
Dec2017 -$0.50
Dec2016 $0.61
Dec2015 $3.25
Dec2014 $6.85
Dec2013 $7.26
Dec2012 $5.83
Dec2011 $4.66
Dec2010 $2.78
Dec2009 $1.49
Dec2008 $1.94
Dec2007 $7.90
Dec2006 $7.37
Dec2005 $5.57
Dec2004 $3.41
Dec2003 $2.20
Dec2002 $1.56

Recommended Reading:

Other ModernGraham posts about the company

ConocoPhillips Valuation – April 2018 $COP
ConocoPhillips Valuation – July 2016 $COP
58 Companies in the Spotlight This Week – 1/31/15
Conoco Phillips Annual Valuation – 2015 $COP
14 Companies in the Spotlight This Week – 1/18/14

Other ModernGraham posts about related companies

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HollyFrontier Corp Valuation – January 2019 $HFC
Hess Corp Valuation – January 2019 $HES
Cimarex Energy Co Valuation – January 2019 $XEC
EQT Corp Valuation – January 2019 $EQT
Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB

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.

Copart Inc Valuation – August 2018 $CPRT

Company Profile (excerpt from Reuters): Copart, Inc. (Copart), incorporated on January 6, 2012, is a provider of online auctions and vehicle remarketing services in the United States, Canada, the United Kingdom, the United Arab Emirates, Oman, Bahrain, Brazil, Ireland, Spain and India. The Company also provides vehicle remarketing services in Germany. The Company operates through two segments: United States and International. The Company provides vehicle sellers with a range of services to process and sell vehicles primarily over the Internet through its virtual bidding third generation Internet auction-style sales technology (VB3). It sells vehicles primarily to insurance companies, such as banks and financial institutions, charities, car dealerships, municipalities, fleet operators and vehicle rental companies. The Company sells the vehicles principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers and exporters and, at certain locations, to the general public.

CPRT Chart

CPRT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CPRT – 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 $13,893,111,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.33 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 220.00% Pass
6. Moderate PEmg Ratio PEmg < 20 43.10 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.98 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 2.33 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.11 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 $1.39
MG Growth Estimate 15.00%
MG Value $53.59
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $20.18
MG Value based on 0% Growth $11.83
Market Implied Growth Rate 17.30%
Current Price $60.00
% of Intrinsic Value 111.96%

Copart, Inc. does not satisfy the requirements of either the Enterprising Investor or 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 concerns regarding the level of debt relative to the net current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.65 in 2014 to an estimated $1.39 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.3% 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 Copart, Inc. revealed the company was trading above its Graham Number of $13.54. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 43.1, which was above the industry average of 18.51. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.3.

Copart, 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) -$0.30
Graham Number $13.54
PEmg 43.10
Current Ratio 2.33
PB Ratio 9.98
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 4/1/2018
Total Current Assets $630,902,000
Total Current Liabilities $270,578,000
Long-Term Debt $398,914,000
Total Assets $2,165,193,000
Intangible Assets $411,841,000
Total Liabilities $704,381,000
Shares Outstanding (Diluted Average) 242,960,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.71
Jul2017 $1.66
Jul2016 $1.11
Jul2015 $0.84
Jul2014 $0.68
Jul2013 $0.70
Jul2012 $0.70
Jul2011 $0.54
Jul2010 $0.45
Jul2009 $0.42
Jul2008 $0.44
Jul2007 $0.37
Jul2006 $0.26
Jul2005 $0.28
Jul2004 $0.22
Jul2003 $0.16
Jul2002 $0.16
Jul2001 $0.13
Jul2000 $0.09
Jul1999 $0.07
Jul1998 $0.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.39
Jul2017 $1.15
Jul2016 $0.87
Jul2015 $0.73
Jul2014 $0.65
Jul2013 $0.61
Jul2012 $0.55
Jul2011 $0.46
Jul2010 $0.41
Jul2009 $0.38
Jul2008 $0.35
Jul2007 $0.29
Jul2006 $0.23
Jul2005 $0.21
Jul2004 $0.17
Jul2003 $0.14
Jul2002 $0.12

Recommended Reading:

Other ModernGraham posts about the company

14 Best Stocks for Value Investors This Week – 2/11/17
Copart Inc Valuation – Initial Coverage $CPRT

Other ModernGraham posts about related companies

Harley-Davidson Inc Valuation – June 2018 $HOG
Advance Auto Parts Inc Valuation – June 2018 $AAP
LKQ Corporation – June 2018 $LKQ
Aptiv PLC Valuation – Initial Coverage May 2018 $APTV
BorgWarner Inc Valuation – April 2018 $BWA
CarMax Inc Valuation – April 2018 $KMX
Ford Motor Company Valuation – April 2018 $F
General Motors Co Valuation – April 2018 $GM
O’Reilly Automotive Inc Valuation – April 2018 $ORLY
Goodyear Tire & Rubber Co Valuation – March 2018 $GT

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.

ConocoPhillips Valuation – April 2018 $COP

Company Profile (excerpt from Reuters): ConocoPhillips, incorporated on November 16, 2001, is an independent exploration and production (E&P) company. The Company explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG) and natural gas liquids. The Company operates through six segments: Alaska, Lower 48, Canada, Europe and North Africa, Asia Pacific and Middle East, and Other International. As of December 31, 2016, its operations were in the United States, Norway, the United Kingdom, Canada, Australia, Timor-Leste, Indonesia, China, Malaysia, Qatar and Libya. Its portfolio includes North American unconventional assets and oil sands assets in Canada; conventional assets in North America, Europe, Asia and Australia; LNG developments, and an inventory of conventional and unconventional exploration prospects. The Company’s subsidiaries include ConocoPhillips Company, ConocoPhillips Canada Funding Company I and Burlington Resources, Inc.

COP Chart

COP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COP – April 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 $68,231,207,154 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.76 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 -109.93% Fail
6. Moderate PEmg Ratio PEmg < 20 -180.40 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.26 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 1.76 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.41 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 -$0.32
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$4.67
MG Value based on 0% Growth -$2.74
Market Implied Growth Rate -94.45%
Current Price $58.09
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $6.85 in 2014 to an estimated $-0.32 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into ConocoPhillips revealed the company was trading above its Graham Number of $31.26. The company pays a dividend of $1.06 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was -180.4, which was below the industry average of 85.36, 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 $-22.02.

ConocoPhillips 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) -$22.02
Graham Number $31.26
PEmg -180.40
Current Ratio 1.76
PB Ratio 2.26
Current Dividend $1.06
Dividend Yield 1.82%
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 $16,512,000,000
Total Current Liabilities $9,397,000,000
Long-Term Debt $17,128,000,000
Total Assets $73,362,000,000
Intangible Assets $0
Total Liabilities $42,755,000,000
Shares Outstanding (Diluted Average) 1,191,926,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.67
Dec2017 -$0.70
Dec2016 -$2.91
Dec2015 -$3.58
Dec2014 $5.51
Dec2013 $7.38
Dec2012 $6.72
Dec2011 $8.97
Dec2010 $7.62
Dec2009 $2.94
Dec2008 -$11.16
Dec2007 $7.22
Dec2006 $9.66
Dec2005 $9.55
Dec2004 $5.80
Dec2003 $3.46
Dec2002 -$0.31
Dec2001 $2.82
Dec2000 $3.63
Dec1999 $1.20
Dec1998 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.32
Dec2017 -$0.50
Dec2016 $0.61
Dec2015 $3.25
Dec2014 $6.85
Dec2013 $7.26
Dec2012 $5.80
Dec2011 $4.60
Dec2010 $2.70
Dec2009 $1.37
Dec2008 $1.80
Dec2007 $7.90
Dec2006 $7.37
Dec2005 $5.57
Dec2004 $3.41
Dec2003 $2.20
Dec2002 $1.56

Recommended Reading:

Other ModernGraham posts about the company

58 Companies in the Spotlight This Week – 1/31/15
Conoco Phillips Annual Valuation – 2015 $COP
14 Companies in the Spotlight This Week – 1/18/14
ModernGraham Valuation: Conoco Phillips (COP)

Other ModernGraham posts about related companies

Devon Energy Corp Valuation – March 2018 $DVN
Noble Energy Inc Valuation – March 2018 $NBL
ONEOK Inc Valuation – March 2018 $OKE
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Hess Corp Valuation – March 2018 $HES
Cimarex Energy Co Valuation – Initial Coverage $XEC
EQT Corporation Valuation – March 2018 $EQT
Helmerich & Payne Inc Valuation – March 2018 $HP
Chesapeake Energy Corp Valuation – March 2018 $CHK
Williams Companies Inc Valuation – March 2018 $WMB

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.

Copart Inc Valuation – Initial Coverage $CPRT

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

Company Profile (obtained from Google Finance): Copart, Inc. (Copart) is a provider of online auctions and vehicle remarketing services in the United States, Canada, the United Kingdom, the United Arab Emirates, Oman, Bahrain, Brazil, Ireland, Spain and India. The Company also provides vehicle remarketing services in Germany. The Company operates through two segments: United States and International. The Company provides vehicle sellers with a range of services to process and sell vehicles primarily over the Internet through its virtual bidding third generation Internet auction-style sales technology (VB3). The Company’s service offerings include Online Seller Access, Salvage Estimation Services, Estimating Services, End-Of-Life Vehicle Processing, Virtual Insured Exchange (VIX), Transportation Services, Vehicle Inspection Stations, On-Demand Reporting, Department of Motor Vehicle (DMV) Processing, Flexible Vehicle Processing Programs, Buy It Now, Member Network, Sales Process, Copart Dealer Services, CashForCars.com and U-Pull-It.

CPRT Chart

CPRT data by YCharts

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ModernGraham Valuation of CPRT – February 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,559,483,783 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.76 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 140.08% Pass
6. Moderate PEmg Ratio PEmg < 20 28.76 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.39 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 1.76 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 Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.98
MG Growth Estimate 9.27%
MG Value $53.57
Opinion Fairly Valued
MG Grade C
MG Value based on 3% Growth $28.72
MG Value based on 0% Growth $16.84
Market Implied Growth Rate 10.13%
Current Price $56.97
% of Intrinsic Value 106.35%

Copart, Inc. is suitable for the Enterprising Investor but not 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.22 in 2013 to an estimated $1.98 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 10.13% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Copart, Inc. revealed the company was trading above its Graham Number of $19.31. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 28.76, which was above the industry average of 18.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.8.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$2.80
Graham Number $19.31
PEmg 28.76
Current Ratio 1.76
PB Ratio 8.39
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 10/1/2016
Total Current Assets $630,711,000
Total Current Liabilities $357,678,000
Long-Term Debt $0
Total Assets $1,770,396,000
Intangible Assets $265,334,000
Total Liabilities $962,989,000
Shares Outstanding (Diluted Average) 118,879,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.35
Jul2016 $2.21
Jul2015 $1.67
Jul2014 $1.36
Jul2013 $1.39
Jul2012 $1.39
Jul2011 $1.08
Jul2010 $0.89
Jul2009 $0.83
Jul2008 $0.88
Jul2007 $0.73
Jul2006 $0.52
Jul2005 $0.55
Jul2004 $0.44
Jul2003 $0.31
Jul2002 $0.32
Jul2001 $0.25
Jul2000 $0.18
Jul1999 $0.13
Jul1998 $0.09
Jul1997 $0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.98
Jul2016 $1.73
Jul2015 $1.45
Jul2014 $1.31
Jul2013 $1.22
Jul2012 $1.10
Jul2011 $0.93
Jul2010 $0.83
Jul2009 $0.76
Jul2008 $0.69
Jul2007 $0.57
Jul2006 $0.47
Jul2005 $0.42
Jul2004 $0.34
Jul2003 $0.27
Jul2002 $0.23
Jul2001 $0.17

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

Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA
Ford Motor Company Valuation – November 2016 $F
CarMax Inc Valuation – November 2016 $KMX
Advance Auto Parts Inc Valuation – November 2016 $AAP
General Motors Company Valuation – November 2016 $GM
Delphi Automotive PLC Valuation – August 2016 $DLPH
Carmax Inc Valuation – August 2016 $KMX
BorgWarner Inc Valuation – August 2016 $BWA

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.

ConocoPhillips Valuation – July 2016 $COP

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

Company Profile (obtained from Google Finance): ConocoPhillips (ConocoPhillips) is an independent exploration and production company. The Company explores for, produces, transports and markets crude oil, bitumen, natural gas and liquefied natural gas (LNG). The Company operates through six operating segments, which are primarily defined by geographic region: Alaska; Lower 48; Canada; Europe and North Africa; Asia Pacific and Middle East, and Other International. The Company’s continuing operations are producing in the United States, Norway, the United Kingdom, Canada, Australia, Timor-Leste, Indonesia, China, Malaysia and Qatar. The Company’s portfolio includes North American unconventional assets and oil sands assets in Canada; assets in North America, Europe, Asia and Australia; several international developments, and an inventory of global conventional and unconventional exploration prospects.

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ModernGraham Valuation of COP – 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 $49,287,701,803 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.24 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 21.43% Fail
6. Moderate PEmg Ratio PEmg < 20 62.45 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.30 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 1.24 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.98 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

COP value chart July 2016

EPSmg $0.65
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $9.46
MG Value based on 0% Growth $5.55
Market Implied Growth Rate 26.98%
Current Price $40.76
% of Intrinsic Value N/A

ConocoPhillips does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability 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 $5.84 in 2012 to an estimated $0.65 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 26.98% 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.

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

Stage 3: Information for Further Research

COP charts July 2016

Net Current Asset Value (NCAV) -$40.02
Graham Number $0.00
PEmg 62.45
Current Ratio 1.24
PB Ratio 1.30
Current Dividend $2.46
Dividend Yield 6.04%
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 $10,934,000,000
Total Current Liabilities $8,825,000,000
Long-Term Debt $27,376,000,000
Total Assets $99,834,000,000
Intangible Assets $0
Total Liabilities $60,745,000,000
Shares Outstanding (Diluted Average) 1,244,557,000

Earnings Per Share History

Next Fiscal Year Estimate -$2.78
Dec2015 -$3.58
Dec2014 $5.51
Dec2013 $7.38
Dec2012 $6.72
Dec2011 $8.97
Dec2010 $7.62
Dec2009 $3.24
Dec2008 -$11.16
Dec2007 $7.22
Dec2006 $9.66
Dec2005 $9.55
Dec2004 $5.80
Dec2003 $3.46
Dec2002 -$0.31
Dec2001 $2.82
Dec2000 $3.63
Dec1999 $1.20
Dec1998 $0.46
Dec1997 $1.81
Dec1996 $2.46

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.65
Dec2015 $3.25
Dec2014 $6.85
Dec2013 $7.28
Dec2012 $5.84
Dec2011 $4.66
Dec2010 $2.78
Dec2009 $1.47
Dec2008 $1.80
Dec2007 $7.90
Dec2006 $7.37
Dec2005 $5.57
Dec2004 $3.41
Dec2003 $2.20
Dec2002 $1.56
Dec2001 $2.33
Dec2000 $2.02

Recommended Reading:

Other ModernGraham posts about the company

58 Companies in the Spotlight This Week – 1/31/15
Conoco Phillips Annual Valuation – 2015 $COP
14 Companies in the Spotlight This Week – 1/18/14
ModernGraham Valuation: Conoco Phillips (COP)

Other ModernGraham posts about related companies

Devon Energy Corp Valuation – July 2016 $DVN
Noble Energy Inc Valuation – July 2016 $NBL
Diamond Offshore Drilling Inc Valuation – July 2016 $DO
Nabors Industries Ltd Valuation – July 2016 $NBR
Transocean Ltd Valuation – July 2016 $RIG
ONEOK Inc Valuation – July 2016 $OKE
Marathon Oil Corp Valuation – July 2016 $MRO
Hess Corp Valuation – July 2016 $HES
EQT Corporation Valuation – July 2016 $EQT
QEP Resources Inc Valuation – July 2016 $QEP

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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About MG Stocks & Screens:

Inside this monthly publication available for premium subscribers is a listing of all the companies reviewed by ModernGraham (currently over 520 different companies) in a handy table with some key figures.  It then proceeds to screen the companies regarding different topics.

Inside the PDF report, you will find screens for:

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  • Lowest PEmg Ratio – Defensive Investor
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As always, remember that ModernGraham makes no recommendations for investments in specific situations.  Please consult a registered broker or investment advisor regarding your individual investment decisions.

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Conoco Phillips Annual Valuation – 2015 $COP

conoco-phillipsBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Conoco Phillips (COP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): ConocoPhillips is an independent exploration and production (E&P) company. The Company manages its operations through six segments: The Alaska segment explores for, produces, transports and markets crude oil, natural gas liquids, natural gas and LNG; The Lower 48 and Latin America segment consists of operations located in the United States Lower 48 states, as well as exploration in the Gulf of Mexico and Colombia; Canadian operations consist of natural gas fields in western Canada and oil sands developments in the Athabasca Region of northeastern Alberta; The Europe segment consists of operations located in the Norwegian and United Kingdom sectors of the North Sea, as well as exploration in Poland and Greenland; The Asia Pacific and Middle East segment has exploration and production in China, Indonesia, Malaysia, Australia and the Timor Sea, operations in Qatar, Bangladesh and Brunei; The Other International segment includes exploration and producing operations in Libya and Russia.

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

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

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

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

Valuation Summary

Key Data:

Recent Price $64.65
MG Value $259.85
MG Opinion Undervalued
Value Based on 3% Growth $97.87
Value Based on 0% Growth $57.37
Market Implied Growth Rate 0.54%
NCAV -$38.05
PEmg 9.58
Current Ratio 1.15
PB Ratio 1.46

Balance Sheet – September 2014

Current Assets $16,253,000,000
Current Liabilities $14,141,000,000
Total Debt $19,499,000,000
Total Assets $118,986,000,000
Intangible Assets $0
Total Liabilities $63,712,000,000
Outstanding Shares 1,247,400,000

Earnings Per Share

2014 (estimate) $5.20
2013 $7.38
2012 $6.72
2011 $8.97
2010 $7.62
2009 $2.94
2008 -$11.16
2007 $7.22
2006 $9.66
2005 $9.55
2004 $5.80

Earnings Per Share – ModernGraham

2014 (estimate) $6.75
2013 $7.26
2012 $5.80
2011 $4.60
2010 $2.70
2009 $1.37

Dividend History

Conclusion:

Conoco Phillips is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio and the insufficient earnings stability or growth over the last ten years.  The Enterprising Investor is concerned with the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $2.70 in 2010 to an estimated $6.75 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 0.54% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of Conoco Phillips (COP) for greater perspective!

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

Disclaimer:  The author did not hold a position in Conoco Phillips (COP) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Freeport-McMoRan Copper & Gold Quarterly Valuation – June 2014 $FCX

500px-Freeport_McMoRan.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Freeport McMoRan (FCX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Freeport-McMoRan Copper & Gold Inc. (FCX) is an international mining company. FCX is one of the copper, gold and molybdenum mining companies in terms of reserves and production. Its portfolio of assets includes the Grasberg minerals district in Indonesia, mining operations in North and South America, and the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC). The Grasberg minerals district contains the recoverable copper reserve and the gold reserve. It also operates Atlantic Copper, its wholly owned copper smelting and refining unit in Spain. FCX has its operations into five primary divisions: North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum operations. In May 2013, the Company completes acquisition of Plains Exploration & Production Company. In June 2013, FCX acquired the remaining 64% interest in McMoRan Exploration Co.

FCX Chart

FCX data by YCharts

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

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

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

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

Valuation Summary

Key Data:

Recent Price $33.56
MG Value $113.33
MG Opinion Undervalued
Value Based on 3% Growth $42.84
Value Based on 0% Growth $25.11
Market-Implied Growth Rate 1.43%
NCAV -$32.01
PEmg 11.36
Current Ratio 1.75
PB Ratio 1.65

Balance Sheet – 3/31/2014

Current Assets $9,430,000,000
Current Liabilities $5,383,000,000
Total Debt $19,759,000,000
Total Assets $63,843,000,000
Intangible Assets $1,916,000,000
Total Liabilities $42,693,000,000
Outstanding Shares 1,039,000,000

Earnings Per Share

2014 (estimate) $2.03
2013 $2.64
2012 $3.19
2011 $4.77
2010 $4.50
2009 $2.93
2008 -$14.86
2007 $3.71
2006 $3.15
2005 $2.34
2004 $0.43

Earnings Per Share – ModernGraham

2014 (estimate) $2.95
2013 $3.48
2012 $2.64
2011 $1.64
2010 $0.01
2009 -$1.67

Dividend History

FCX Dividend Chart

FCX Dividend data by YCharts

Conclusion:

Freeport-McMoRan satisfies the Enterprising Investor but not the Defensive Investor.  The Defensive Investor has concerns with the low current ratio, as well as the lack of earnings stability over the last ten years and the lack of stable dividend payments over that time frame.  The Enterprising Investor’s only concern is with the high level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  From a valuation side of things, the company appears to be significantly undervalued after growing its EPSmg (normalized earnings) from $0.01 in 2010 to an estimated $2.95 for 2014.  This level of demonstrated growth more than supports the market’s implied estimate of 1.43% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return 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 Freeport-McMoRan (FCX)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Be sure to review the previous ModernGraham Valuations of Freeport-McMoRan (FCX)!

Disclaimer:  The author did not hold a position in Freeport-McMoRan (FCX) or 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.

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

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About ModernGraham Stocks & Screens:

Inside this monthly publication available for premium subscribers is a listing of all the companies reviewed by ModernGraham (currently 257 different companies) in a handy table with some key figures.  It then proceeds to screen the companies regarding different topics.

Inside, you will find screens for:

  • Undervalued Companies, sorted by Defensive, Enterprising, and Speculative
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Since the January 2014 issue, you will also find the following mock portfolios:

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Available Issues:  

  • May 2014 (includes 257 companies)
  • April 2014 (includes 217 companies)
  • March 2014 (includes 184 companies) (free when you sign up for our daily email updates)
  • February 2014 (126 companies)
  • January 2014 (76 companies)
  • December 2013 (36 companies)
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