Coty Inc Valuation – March 2019 #COTY

Company Profile (excerpt from Reuters): Coty Inc., incorporated on January 20, 1995, is a beauty company. The Company operates through four segments: Fragrances, Color Cosmetics, Skin & Body Care and Brazil Acquisition. The Company sells products in each of its segments through retailers, including hypermarkets, supermarkets, independent and chain drug stores and pharmacies, upscale perfumeries, upscale and mid-tier department stores, nail salons, specialty retailers, duty-free shops and traditional food, drug and mass retailers. It sells a range of its products through travel retail sales channels, including duty-free shops, airlines, cruise lines and other tax-free zones. In addition, the Company sells its products through the Internet over its retail partners’ e-commerce sites and through online retailers, and the Company sells its philosophy products through philosophy-branded Websites and through direct marketing through television. The Company operates in the Americas (comprising North, Central and South America); Europe, the Middle East and Africa (EMEA), and Asia Pacific (comprising Asia and Australia).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COTY – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,372,757,379 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 185.71% Pass
6. Moderate PEmg Ratio PEmg < 20 -24.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.10 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -50.21 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

EPSmg -$0.45
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$6.51
MG Value based on 0% Growth -$3.81
Market Implied Growth Rate -16.68%
Current Price $11.15
% of Intrinsic Value N/A

Coty Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability 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 $0.12 in 2015 to an estimated $-0.45 for 2019. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Coty Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.5 per share, for a yield of 4.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -24.85, which was below the industry average of 62.84, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.24.

Coty 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) -$13.24
Graham Number $0.00
PEmg -24.85
Current Ratio 0.96
PB Ratio 1.10
Current Dividend $0.50
Dividend Yield 4.48%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,714,400,000
Total Current Liabilities $3,865,000,000
Long-Term Debt $7,560,900,000
Total Assets $21,270,700,000
Intangible Assets $15,594,400,000
Total Liabilities $13,659,400,000
Shares Outstanding (Diluted Average) 751,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.07
Jun2018 -$0.23
Jun2017 -$0.66
Jun2016 $0.44
Jun2015 $0.64
Jun2014 -$0.26
Jun2013 $0.42
Jun2012 -$0.85
Jun2011 $0.00
Jun2010 $0.16

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.45
Jun2018 -$0.10
Jun2017 $0.02
Jun2016 $0.26
Jun2015 $0.12
Jun2014 -$0.13
Jun2013 -$0.06
Jun2012 -$0.25
Jun2011 $0.04
Jun2010 $0.05

Recommended Reading:

Other ModernGraham posts about the company

10 Most Overvalued Stocks of the S&P 500 – July 2018
Coty Inc Valuation – May 2018 $COTY
Coty Inc Valuation – Initial Coverage $COTY

Other ModernGraham posts about related companies

Signet Jewelers Ltd Valuation – March 2019 #SIG
Church & Dwight Co Inc Valuation – February 2019 $CHD
International Flavors & Fragrances Inc Valuation – January 2019 $IFF
Estee Lauder Companies Inc Valuation – December 2018 $EL
Proctor & Gamble Co Valuation – November 2018 $PG
Johnson & Johnson Valuation – November 2018 $JNJ
Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL

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.

Coty Inc Valuation – May 2018 $COTY

Company Profile (excerpt from Reuters): Coty Inc., incorporated on January 20, 1995, is a beauty company. The Company operates through four segments: Fragrances, Color Cosmetics, Skin & Body Care and Brazil Acquisition. The Company sells products in each of its segments through retailers, including hypermarkets, supermarkets, independent and chain drug stores and pharmacies, upscale perfumeries, upscale and mid-tier department stores, nail salons, specialty retailers, duty-free shops and traditional food, drug and mass retailers. It sells a range of its products through travel retail sales channels, including duty-free shops, airlines, cruise lines and other tax-free zones. In addition, the Company sells its products through the Internet over its retail partners’ e-commerce sites and through online retailers, and the Company sells its philosophy products through philosophy-branded Websites and through direct marketing through television. The Company operates in the Americas (comprising North, Central and South America); Europe, the Middle East and Africa (EMEA), and Asia Pacific (comprising Asia and Australia).

COTY Chart

COTY data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COTY – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,528,094,898 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.99 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -366.67% Fail
6. Moderate PEmg Ratio PEmg < 20 526.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.11 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.99 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -244.51 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 $0.03
MG Growth Estimate 0.79%
MG Value $0.27
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $0.39
MG Value based on 0% Growth $0.23
Market Implied Growth Rate 259.00%
Current Price $14.04
% of Intrinsic Value 5223.76%

Coty Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability 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 growing its EPSmg (normalized earnings) from $0.03 in 2014 to an estimated $0.03 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 259% 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 Coty Inc revealed the company was trading above its Graham Number of $6.26. The company pays a dividend of $0.65 per share, for a yield of 4.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 526.5, which was above the industry average of 28.09. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.8.

Coty 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) -$13.80
Graham Number $6.26
PEmg 526.50
Current Ratio 0.99
PB Ratio 1.11
Current Dividend $0.65
Dividend Yield 4.63%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $3,910,600,000
Total Current Liabilities $3,941,800,000
Long-Term Debt $7,628,600,000
Total Assets $23,765,000,000
Intangible Assets $17,634,900,000
Total Liabilities $14,265,700,000
Shares Outstanding (Diluted Average) 750,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.14
Jun2017 -$0.66
Jun2016 $0.44
Jun2015 $0.64
Jun2014 -$0.26
Jun2013 $0.42

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.03
Jun2017 $0.02
Jun2016 $0.32
Jun2015 $0.23
Jun2014 $0.03
Jun2013 $0.14

Recommended Reading:

Other ModernGraham posts about the company

Coty Inc Valuation – Initial Coverage $COTY

Other ModernGraham posts about related companies

Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL
Coty Inc Valuation – Initial Coverage $COTY
Signet Jewelers Ltd Valuation – Initial Coverage $SIG
Inter Parfums Inc Valuation – Initial Coverage $IPAR

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.

Coty Inc Valuation – Initial Coverage $COTY

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

Company Profile (obtained from Google Finance): Coty Inc. is a beauty company. The Company operates through four segments: Fragrances, Color Cosmetics, Skin & Body Care and Brazil Acquisition. Its fragrance products include a range of men’s and women’s products. Its fragrance brands include Calvin Klein, Marc Jacobs, Davidoff, Chloe, Balenciaga, Beyonce, Bottega Veneta, Miu Miu and Roberto Cavalli. Its color cosmetics products include lip, eye, nail and facial color products. The brands in its Color Cosmetics segment include Bourjois, Rimmel, Sally Hansen and OPI. Its skin & body care products include shower gels, deodorants, skin care and sun treatment products. Its skin & body care brands are adidas, Lancaster, philosophy and Playboy. The Company, through Hypermarcas S.A., engages in personal care and beauty business. The Brazil Acquisition segment includes product groupings, such as skin care, nail care, deodorants and hair care products. It operates in the Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific.

COTY Chart

COTY data by YCharts

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of COTY – 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 $14,531,101,534 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 6233.33% Pass
6. Moderate PEmg Ratio PEmg < 20 37.89 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 25.99 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 18.73 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 $0.51
MG Growth Estimate 15.00%
MG Value $19.71
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $7.42
MG Value based on 0% Growth $4.35
Market Implied Growth Rate 14.70%
Current Price $19.40
% of Intrinsic Value 98.42%

Coty Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years. 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 $-0.06 in 2013 to an estimated $0.51 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 14.7% 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 Coty Inc revealed the company was trading above its Graham Number of $3.71. The company pays a dividend of $0.28 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 37.89, which was above the industry average of 26.36. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-14.38.

Coty 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) -$14.38
Graham Number $3.71
PEmg 37.89
Current Ratio 1.12
PB Ratio 25.99
Current Dividend $0.28
Dividend Yield 1.42%
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 $2,107,700,000
Total Current Liabilities $1,882,900,000
Long-Term Debt $4,210,400,000
Total Assets $7,193,400,000
Intangible Assets $4,230,300,000
Total Liabilities $6,942,400,000
Shares Outstanding (Diluted Average) 336,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.82
Jun2016 $0.44
Jun2015 $0.64
Jun2014 -$0.26
Jun2013 $0.42
Jun2012 -$0.87
Jun2011 $0.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.51
Jun2016 $0.26
Jun2015 $0.12
Jun2014 -$0.12
Jun2013 -$0.06
Jun2012 -$0.24
Jun2011 $0.06

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

Signet Jewelers Ltd Valuation – Initial Coverage $SIG
Inter Parfums Inc Valuation – Initial Coverage $IPAR
Church & Dwight Co Inc Valuation – Initial Coverage $CHD
Service Corporation Intl Valuation – Initial Coverage $SCI
Avon Products Inc Valuation – July 2016 $AVP
Proctor & Gamble Co Valuation – July 2016 $PG
International Flavors & Fragrances Inc Valuation – June 2016 $IFF
Kimberly-Clark Corporation Valuation – June 2016 $KMB
Estee Lauder Companies Inc Valuation – May 2016 $EL
Colgate-Palmolive Co Valuation – January 2016 Update $CL

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.

Colgate-Palmolive Co Valuation – March 2019 #CL

Company Profile (excerpt from Reuters): Colgate-Palmolive Company (Colgate), incorporated on July 25, 1923, is a consumer products company. The Company operates in two product segments: Oral, Personal and Home Care, and Pet Nutrition. The Oral, Personal and Home Care product segment is operated through five geographic segments, which include North America, Latin America, Europe, Asia Pacific and Africa/Eurasia. It is engaged in oral care business with toothpaste and manual toothbrush brands around the world. The Company’s oral care products include Colgate Total, Colgate Sensitive Pro-Relief, Colgate Max Fresh, Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer, Colgate Optic White and Colgate Luminous White toothpastes, Colgate 360 degree and Colgate Slim Soft manual toothbrushes and Colgate Optic White, Colgate Total and Colgate Plax mouthwashes. Colgate’s Oral Care business also includes pharmaceutical products for dentists and other oral health professionals.

CL Chart

CL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CL – 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 $57,098,959,614 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.14 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 7.02% Fail
6. Moderate PEmg Ratio PEmg < 20 26.06 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 291.66 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 1.14 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 14.06 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.54
MG Growth Estimate 3.00%
MG Value $36.88
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $36.88
MG Value based on 0% Growth $21.62
Market Implied Growth Rate 8.78%
Current Price $66.27
% of Intrinsic Value 179.68%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.12 in 2015 to an estimated $2.54 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.78% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Colgate-Palmolive Company revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.66 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.06, which was below the industry average of 62.84, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.42.

Colgate-Palmolive Company receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.42
Graham Number $0.00
PEmg 26.06
Current Ratio 1.14
PB Ratio 291.66
Current Dividend $1.66
Dividend Yield 2.50%
Number of Consecutive Years of Dividend Growth 20

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 $3,793,000,000
Total Current Liabilities $3,341,000,000
Long-Term Debt $6,354,000,000
Total Assets $12,161,000,000
Intangible Assets $4,167,000,000
Total Liabilities $11,964,000,000
Shares Outstanding (Diluted Average) 867,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.67
Dec2018 $2.75
Dec2017 $2.28
Dec2016 $2.72
Dec2015 $1.52
Dec2014 $2.36
Dec2013 $2.38
Dec2012 $2.57
Dec2011 $2.47
Dec2010 $2.16
Dec2009 $2.19
Dec2008 $1.83
Dec2007 $1.60
Dec2006 $1.23
Dec2005 $1.22
Dec2004 $1.17
Dec2003 $1.23
Dec2002 $1.10
Dec2001 $0.95
Dec2000 $0.85
Dec1999 $0.74

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.54
Dec2018 $2.43
Dec2017 $2.26
Dec2016 $2.27
Dec2015 $2.12
Dec2014 $2.41
Dec2013 $2.41
Dec2012 $2.36
Dec2011 $2.19
Dec2010 $1.96
Dec2009 $1.78
Dec2008 $1.52
Dec2007 $1.34
Dec2006 $1.20
Dec2005 $1.17
Dec2004 $1.12
Dec2003 $1.05

Recommended Reading:

Other ModernGraham posts about the company

Colgate-Palmolive Co Valuation – June 2018 $CL
Colgate-Palmolive Co. Valuation – April 2017 $CL
Colgate-Palmolive Co Valuation – January 2016 Update $CL
32 Companies in the Spotlight This Week – 12/6/14
Colgate-Palmolive Annual Valuation – 2014 $CL

Other ModernGraham posts about related companies

Coty Inc Valuation – March 2019 #COTY
Signet Jewelers Ltd Valuation – March 2019 #SIG
Church & Dwight Co Inc Valuation – February 2019 $CHD
International Flavors & Fragrances Inc Valuation – January 2019 $IFF
Estee Lauder Companies Inc Valuation – December 2018 $EL
Proctor & Gamble Co Valuation – November 2018 $PG
Johnson & Johnson Valuation – November 2018 $JNJ
Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP

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.

Signet Jewelers Ltd Valuation – March 2019 #SIG

Company Profile (excerpt from Reuters): Signet Jewelers Limited, incorporated on June 25, 2008, is a retailer of diamond jewelry. As of January 28, 2017, the Company had 3,682 stores and kiosks. The Company’s segments include the Sterling Jewelers division; the Zale division, which consists of the Zale Jewelry and Piercing Pagoda segments; the UK Jewelry division, and Other. The Sterling Jewelers division’s stores operate in the United States in malls and off-mall locations principally as Kay Jewelers (Kay), Kay Jewelers Outlet, Jared The Galleria Of Jewelry (Jared) and Jared Vault. The Zale division operates jewelry stores (Zale Jewelry) and kiosks (Piercing Pagoda), located primarily in shopping malls throughout the United States, Canada and Puerto Rico. Zale Jewelry includes the United States store brand, Zales (Zales Jewelers and Zales Outlet), and the Canadian store brand, Peoples Jewellers. Piercing Pagoda operates through mall-based kiosks. The UK Jewelry division operates stores in the United Kingdom, Republic of Ireland and Channel Islands, principally as H.Samuel and Ernest Jones. The Other segment includes the operations of subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SIG – 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 $1,440,038,868 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.20 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 5.20% Fail
6. Moderate PEmg Ratio PEmg < 20 11.44 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.73 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 2.20 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.40 Pass
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 $2.42
MG Growth Estimate -4.25%
MG Value $1.29
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $35.13
MG Value based on 0% Growth $20.59
Market Implied Growth Rate 1.47%
Current Price $27.71
% of Intrinsic Value 2149.19%

Signet Jewelers Ltd. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding 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 $4.32 in 2015 to an estimated $2.42 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.47% 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 Signet Jewelers Ltd. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.24 per share, for a yield of 4.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.44, which was below the industry average of 62.84, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.29.

Signet Jewelers Ltd. 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) $1.29
Graham Number $0.00
PEmg 11.44
Current Ratio 2.20
PB Ratio 0.73
Current Dividend $1.24
Dividend Yield 4.47%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $3,010,100,000
Total Current Liabilities $1,365,700,000
Long-Term Debt $660,400,000
Total Assets $4,907,500,000
Intangible Assets $849,200,000
Total Liabilities $2,943,700,000
Shares Outstanding (Diluted Average) 51,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$6.23
Jan2018 $7.44
Jan2017 $7.08
Jan2016 $5.87
Jan2015 $4.75
Jan2014 $4.56
Jan2013 $4.35
Jan2012 $3.73
Jan2011 $2.32
Jan2010 $1.83
Jan2009 -$4.62
Jan2008 $2.55
Jan2007 $3.07
Jan2006 $2.71
Jan2005 $2.94
Jan2004 $0.10
Jan2003 $2.47
Jan2002 $1.98
Jan2001 $1.90
Jan2000 $1.71
Jan1999 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.42
Jan2018 $6.48
Jan2017 $5.77
Jan2016 $4.96
Jan2015 $4.32
Jan2014 $3.86
Jan2013 $2.84
Jan2012 $1.78
Jan2011 $0.88
Jan2010 $0.48
Jan2009 $0.31
Jan2008 $2.61
Jan2007 $2.51
Jan2006 $2.17
Jan2005 $1.89
Jan2004 $1.45
Jan2003 $1.97

Recommended Reading:

Other ModernGraham posts about the company

Best Stocks Below Their Graham Number – February 2019
10 Undervalued Stocks for the Enterprising Investor – January 2019
10 Undervalued Stocks for the Enterprising Investor – July 2018
10 Best Dividend Paying Stocks for the Enterprising Investor – May 2018
10 Stocks for Using A Benjamin Graham Value Investing Strategy – May 2018

Other ModernGraham posts about related companies

Church & Dwight Co Inc Valuation – February 2019 $CHD
International Flavors & Fragrances Inc Valuation – January 2019 $IFF
Estee Lauder Companies Inc Valuation – December 2018 $EL
Proctor & Gamble Co Valuation – November 2018 $PG
Johnson & Johnson Valuation – November 2018 $JNJ
Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY

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.

Church & Dwight Co Inc Valuation – February 2019 $CHD

Company Profile (excerpt from Reuters): Church & Dwight Co., Inc., incorporated on December 14, 1925, develops, manufactures and markets a range of household, personal care and specialty products. The Company’s segments include Consumer Domestic, Consumer International and Specialty Products Division (SPD). The Company sells its consumer products under a range of brands through a distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar, pet, and other specialty stores and Websites. The Company also sells specialty products to industrial customers and distributors. The Company’s brands include ARM & HAMMER, which is used in multiple product categories, such as baking soda, cat litter, carpet deodorization and laundry detergent; TROJAN condoms, lubricants and vibrators; OXICLEAN stain removers, cleaning solutions, laundry detergents, dishwashing detergent and bleach alternatives; SPINBRUSH battery-operated and manual toothbrushes; FIRST RESPONSE home pregnancy and ovulation test kits; NAIR depilatories; ORAJEL oral analgesics; XTRA laundry detergent, and BATISTE dry shampoo. It also offers the combination of the L’IL CRITTERS and VITAFUSION brand names for the Company’s gummy dietary supplement business.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CHD – 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 $16,335,096,318 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.81 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 136.02% Pass
6. Moderate PEmg Ratio PEmg < 20 28.46 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.83 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.81 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.08 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.33
MG Growth Estimate 9.47%
MG Value $63.98
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $33.80
MG Value based on 0% Growth $19.82
Market Implied Growth Rate 9.98%
Current Price $66.34
% of Intrinsic Value 103.69%

Church & Dwight Co., 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, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.43 in 2015 to an estimated $2.33 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 9.98% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Church & Dwight Co., Inc. revealed the company was trading above its Graham Number of $23.34. The company pays a dividend of $0.87 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 28.46, which was below the industry average of 50.15, 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 $-10.05.

Church & Dwight Co., 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) -$10.05
Graham Number $23.34
PEmg 28.46
Current Ratio 0.81
PB Ratio 6.83
Current Dividend $0.87
Dividend Yield 1.31%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,078,200,000
Total Current Liabilities $1,326,300,000
Long-Term Debt $1,508,800,000
Total Assets $6,069,200,000
Intangible Assets $4,266,900,000
Total Liabilities $3,615,400,000
Shares Outstanding (Diluted Average) 252,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.43
Dec2018 $2.27
Dec2017 $2.90
Dec2016 $1.75
Dec2015 $1.54
Dec2014 $1.51
Dec2013 $1.40
Dec2012 $1.23
Dec2011 $1.06
Dec2010 $0.94
Dec2009 $0.85
Dec2008 $0.70
Dec2007 $0.62
Dec2006 $0.52
Dec2005 $0.46
Dec2004 $0.34
Dec2003 $0.32
Dec2002 $0.27
Dec2001 $0.19
Dec2000 $0.14
Dec1999 $0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.33
Dec2018 $2.19
Dec2017 $2.04
Dec2016 $1.56
Dec2015 $1.43
Dec2014 $1.32
Dec2013 $1.19
Dec2012 $1.04
Dec2011 $0.91
Dec2010 $0.79
Dec2009 $0.69
Dec2008 $0.58
Dec2007 $0.50
Dec2006 $0.42
Dec2005 $0.36
Dec2004 $0.29
Dec2003 $0.25

Recommended Reading:

Other ModernGraham posts about the company

Church & Dwight Co Inc Valuation – April 2018 $CHD
Church & Dwight Co Inc Valuation – Initial Coverage $CHD

Other ModernGraham posts about related companies

International Flavors & Fragrances Inc Valuation – January 2019 $IFF
Estee Lauder Companies Inc Valuation – December 2018 $EL
Proctor & Gamble Co Valuation – November 2018 $PG
Johnson & Johnson Valuation – November 2018 $JNJ
Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY
Church & Dwight Co Inc Valuation – April 2018 $CHD

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.

International Flavors & Fragrances Inc Valuation – January 2019 $IFF

Company Profile (excerpt from Reuters): International Flavors & Fragrances Inc., incorporated on December 6, 1909, creates, manufactures and supplies flavors and fragrances (including cosmetic active ingredients) used to impart or improve flavor or fragrance in a range of consumer products. The Company operates in two segments: Flavors and Fragrances. The Flavors segment offers flavor compounds that are sold to the food and beverage industries for use in consumer products, such as prepared foods, beverages, dairy, food and sweet products. The Fragrances segment offers fragrance compounds and fragrance ingredients. Its cosmetic active ingredients consist of active and functional ingredients, botanicals and delivery systems to support its customers’ cosmetic and personal care product lines. The Company’s products are sold to manufacturers of perfumes and cosmetics, hair and other personal care products, soaps and detergents, cleaning products, dairy, meat and other processed foods, beverages, snacks and savory foods, sweet and baked goods, and pharmaceutical and oral care products. As of December 31, 2016, the Company had 42 manufacturing facilities and over 70 creative centers and application laboratories located in over 35 countries that support over 35,000 products. Its manufacturing facilities are located in the United States, the Netherlands, Spain, Great Britain, Turkey, Brazil, Mexico, Australia, China, India and Singapore.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IFF – 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 $14,388,233,724 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 9.16 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 56.57% Pass
6. Moderate PEmg Ratio PEmg < 20 28.17 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.73 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 9.16 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.70 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 $4.79
MG Growth Estimate 2.52%
MG Value $64.90
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $69.46
MG Value based on 0% Growth $40.72
Market Implied Growth Rate 9.83%
Current Price $134.95
% of Intrinsic Value 207.92%

International Flavors & Fragrances Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor 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 $4.1 in 2014 to an estimated $4.79 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.83% 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 International Flavors & Fragrances Inc revealed the company was trading above its Graham Number of $50.39. The company pays a dividend of $2.66 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 28.17, which was below the industry average of 45.62, 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 $16.77.

International Flavors & Fragrances 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) $16.77
Graham Number $50.39
PEmg 28.17
Current Ratio 9.16
PB Ratio 2.73
Current Dividend $2.66
Dividend Yield 1.97%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $6,946,827,000
Total Current Liabilities $758,456,000
Long-Term Debt $4,331,242,000
Total Assets $9,615,542,000
Intangible Assets $1,538,439,000
Total Liabilities $5,577,593,000
Shares Outstanding (Diluted Average) 81,647,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.29
Dec2017 $3.72
Dec2016 $5.05
Dec2015 $5.16
Dec2014 $5.06
Dec2013 $4.29
Dec2012 $3.09
Dec2011 $3.26
Dec2010 $3.26
Dec2009 $2.46
Dec2008 $2.86
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.04
Dec2004 $2.05
Dec2003 $1.83
Dec2002 $1.84
Dec2001 $1.20
Dec2000 $1.22
Dec1999 $1.53
Dec1998 $1.90

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.79
Dec2017 $4.58
Dec2016 $4.85
Dec2015 $4.56
Dec2014 $4.10
Dec2013 $3.50
Dec2012 $3.07
Dec2011 $3.02
Dec2010 $2.86
Dec2009 $2.61
Dec2008 $2.61
Dec2007 $2.40
Dec2006 $2.15
Dec2005 $1.92
Dec2004 $1.78
Dec2003 $1.61
Dec2002 $1.51

Recommended Reading:

Other ModernGraham posts about the company

International Flavors & Fragrances Inc Valuation – March 2018 $IFF
9 Best Stocks For Value Investors This Week – 6/24/16
International Flavors & Fragrances Inc Valuation – June 2016 $IFF
13 Best Stocks For Value Investors This Week – 12/12/15
International Flavors & Fragrances Valuation – December 2015 Update $IFF

Other ModernGraham posts about related companies

Estee Lauder Companies Inc Valuation – December 2018 $EL
Proctor & Gamble Co Valuation – November 2018 $PG
Johnson & Johnson Valuation – November 2018 $JNJ
Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY
Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB

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.

Estee Lauder Companies Inc Valuation – December 2018 $EL

Company Profile (excerpt from Reuters): The Estee Lauder Companies Inc., incorporated on December 9, 1976, manufactures and markets skin care, makeup, fragrance and hair care products. The Company offers products, including skin care, makeup, fragrance, hair care and other. The Company operates in beauty products segment. The Company’s products are sold in over 150 countries and territories under brand names, including Estee Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, Tommy Hilfiger, MAC, Kiton, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin, Tom Ford, Smashbox, Ermenegildo Zegna, AERIN, Tory Burch, RODIN olio lusso, Le Labo, Editions de Parfums Frederic Malle, GLAMGLOW, By Kilian, BECCA and Too Faced.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EL – December 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 $55,944,653,011 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.75 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 115.52% Pass
6. Moderate PEmg Ratio PEmg < 20 40.07 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.18 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 1.75 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.25 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.60
MG Growth Estimate 5.16%
MG Value $67.65
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $52.14
MG Value based on 0% Growth $30.57
Market Implied Growth Rate 15.78%
Current Price $144.09
% of Intrinsic Value 212.98%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.68 in 2015 to an estimated $3.6 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.78% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Estee Lauder Companies Inc revealed the company was trading above its Graham Number of $36.63. The company pays a dividend of $1.48 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 40.07, which was below the industry average of 55.8, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.98.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.98
Graham Number $36.63
PEmg 40.07
Current Ratio 1.75
PB Ratio 12.18
Current Dividend $1.48
Dividend Yield 1.03%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $6,249,000,000
Total Current Liabilities $3,563,000,000
Long-Term Debt $3,361,000,000
Total Assets $12,543,000,000
Intangible Assets $3,193,000,000
Total Liabilities $8,113,000,000
Shares Outstanding (Diluted Average) 374,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.67
Jun2018 $2.95
Jun2017 $3.35
Jun2016 $2.96
Jun2015 $2.82
Jun2014 $3.06
Jun2013 $2.58
Jun2012 $2.16
Jun2011 $1.74
Jun2010 $1.19
Jun2009 $0.55
Jun2008 $1.20
Jun2007 $1.08
Jun2006 $0.56
Jun2005 $0.89
Jun2004 $0.74
Jun2003 $0.63
Jun2002 $0.35
Jun2001 $0.58
Jun2000 $0.60
Jun1999 $0.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.60
Jun2018 $3.05
Jun2017 $3.05
Jun2016 $2.84
Jun2015 $2.68
Jun2014 $2.45
Jun2013 $1.98
Jun2012 $1.58
Jun2011 $1.24
Jun2010 $0.96
Jun2009 $0.85
Jun2008 $0.97
Jun2007 $0.83
Jun2006 $0.68
Jun2005 $0.71
Jun2004 $0.60
Jun2003 $0.53

Recommended Reading:

Other ModernGraham posts about the company

Estee Lauder Companies Inc Valuation – February 2018 $EL
10 Best Stocks For Value Investors This Week – 5/21/16
Estee Lauder Companies Inc Valuation – May 2016 $EL
10 Best Stocks For Value Investors This Week – 10/31/15
The Estee Lauder Company Valuation – October 2015 Update $EL

Other ModernGraham posts about related companies

Proctor & Gamble Co Valuation – November 2018 $PG
Johnson & Johnson Valuation – November 2018 $JNJ
Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY
Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF

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.

Proctor & Gamble Co Valuation – November 2018 $PG

Company Profile (excerpt from Reuters): The Procter & Gamble Company, incorporated on May 5, 1905, is focused on providing branded consumer packaged goods to consumers around the world. The Company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care, and Baby, Feminine & Family Care. The Company sells its products in approximately 180 countries and territories primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high-frequency stores and pharmacies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PG – November 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $229,682,910,985 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 16.92% Fail
6. Moderate PEmg Ratio PEmg < 20 21.83 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.59 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 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.54 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.22
MG Growth Estimate 3.61%
MG Value $66.43
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $61.26
MG Value based on 0% Growth $35.91
Market Implied Growth Rate 6.66%
Current Price $92.21
% of Intrinsic Value 138.80%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.4 in 2015 to an estimated $4.22 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.66% 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 Procter & Gamble Co revealed the company was trading above its Graham Number of $45.2. The company pays a dividend of $2.79 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.83, which was below the industry average of 55.8, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.3.

Procter & Gamble Co receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.30
Graham Number $45.20
PEmg 21.83
Current Ratio 0.80
PB Ratio 4.59
Current Dividend $2.79
Dividend Yield 3.02%
Number of Consecutive Years of Dividend Growth 20

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 $23,346,000,000
Total Current Liabilities $29,220,000,000
Long-Term Debt $20,779,000,000
Total Assets $118,440,000,000
Intangible Assets $69,144,000,000
Total Liabilities $65,936,000,000
Shares Outstanding (Diluted Average) 2,612,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.42
Jun2018 $3.67
Jun2017 $5.59
Jun2016 $3.69
Jun2015 $2.44
Jun2014 $4.01
Jun2013 $3.86
Jun2012 $3.66
Jun2011 $3.93
Jun2010 $4.11
Jun2009 $4.26
Jun2008 $3.64
Jun2007 $3.04
Jun2006 $2.64
Jun2005 $2.53
Jun2004 $2.20
Jun2003 $1.70
Jun2002 $1.55
Jun2001 $1.04
Jun2000 $1.17
Jun1999 $1.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.22
Jun2018 $4.04
Jun2017 $4.13
Jun2016 $3.44
Jun2015 $3.40
Jun2014 $3.90
Jun2013 $3.88
Jun2012 $3.90
Jun2011 $3.95
Jun2010 $3.82
Jun2009 $3.52
Jun2008 $3.04
Jun2007 $2.63
Jun2006 $2.32
Jun2005 $2.05
Jun2004 $1.71
Jun2003 $1.43

Recommended Reading:

Other ModernGraham posts about the company

Proctor & Gamble Co Valuation – February 2018 $PG
5 Overvalued Dow Components – February 2017
5 Overvalued Dow Components – December 2016
5 Overvalued Dow Components – July 2016
Proctor & Gamble Co Valuation – July 2016 $PG

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Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY
Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL

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.

Johnson & Johnson Valuation – November 2018 $JNJ

Company Profile (excerpt from Reuters): Johnson & Johnson, incorporated on November 10, 1887, is a holding company. The Company and its subsidiaries are engaged in the research and development, manufacture and sale of a range of products in the healthcare field. The Company operates through three segments: Consumer, Pharmaceutical and Medical Devices. The Company’s primary focus is on products related to human health and well-being. The Company’s subsidiaries operated 119 manufacturing facilities, as of January 1, 2017. The Company’s research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom. The Company has over 230 operating companies, which conduct business around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JNJ – November 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $391,541,961,784 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.72 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 6.55% Fail
6. Moderate PEmg Ratio PEmg < 20 30.49 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.16 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 1.72 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.49 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.79
MG Growth Estimate 0.16%
MG Value $42.22
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $69.44
MG Value based on 0% Growth $40.70
Market Implied Growth Rate 10.99%
Current Price $145.99
% of Intrinsic Value 345.79%

Johnson & Johnson is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.74 in 2014 to an estimated $4.79 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.99% 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 Johnson & Johnson revealed the company was trading above its Graham Number of $59.86. The company pays a dividend of $3.32 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 30.49, which was below the industry average of 55.8, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.09.

Johnson & Johnson performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.09
Graham Number $59.86
PEmg 30.49
Current Ratio 1.72
PB Ratio 6.16
Current Dividend $3.32
Dividend Yield 2.27%
Number of Consecutive Years of Dividend Growth 20

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 $47,194,000,000
Total Current Liabilities $27,437,000,000
Long-Term Debt $29,480,000,000
Total Assets $155,703,000,000
Intangible Assets $79,339,000,000
Total Liabilities $91,077,000,000
Shares Outstanding (Diluted Average) 2,727,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.10
Dec2017 $0.47
Dec2016 $5.93
Dec2015 $5.48
Dec2014 $5.70
Dec2013 $4.81
Dec2012 $3.86
Dec2011 $3.49
Dec2010 $4.78
Dec2009 $4.40
Dec2008 $4.57
Dec2007 $3.63
Dec2006 $3.73
Dec2005 $3.35
Dec2004 $2.74
Dec2003 $2.29
Dec2002 $2.16
Dec2001 $1.84
Dec2000 $1.61
Dec1999 $1.39
Dec1998 $1.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.79
Dec2017 $3.91
Dec2016 $5.48
Dec2015 $5.06
Dec2014 $4.74
Dec2013 $4.26
Dec2012 $4.06
Dec2011 $4.17
Dec2010 $4.41
Dec2009 $4.13
Dec2008 $3.87
Dec2007 $3.39
Dec2006 $3.13
Dec2005 $2.72
Dec2004 $2.31
Dec2003 $2.01
Dec2002 $1.79

Recommended Reading:

Other ModernGraham posts about the company

Johnson & Johnson Valuation – February 2018 $JNJ
4 Best Stocks for Value Investors This Week – 1/28/17
Best Dividend Paying Stocks for Dividend Growth Investors – January 2017
Johnson & Johnson Valuation – January 2017 $JNJ
Best Dividend Paying Stocks for Dividend Growth Investors – December 2016

Other ModernGraham posts about related companies

Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY
Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL

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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